Vanguard Targets Retirement Investments with Growth Trusts

Vanguard has rolled out a new equity-based investment option for plans and participants that are seeking long-term growth potential. 

The asset manager has launched the Vanguard Target Retirement Growth Trusts, a target-date investment product that provides employees with retirement savings options through their employers. 

The new Growth series expands Vanguard’s target-date lineup by presenting collective investment trusts and funds that maintain an investment mix of diversified portfolios to equities as investors get closer to retirement. 

Through the Growth trusts, which are expected to be available later this year, Vanguard will provide access to research, educational tools, and personalized consultation to support the fund selection process. 

The launch comes after Vanguard launched its Target Retirement Lifetime Income Trusts in partnership with TIAA in December. 

Target-date funds have increasingly gained the attention of millions of 401(k) holders, as the option offers Americans a wide variety of different types of stocks, bonds and other investments, as they prepare for retirement. 

Separately, Fidelity Investments also plans to introduce its Fidelity Freedom Lifetime target-date CIT series early next year. The product will incorporate an insurance allocation backed by Nationwide and New York Life, enabling eligible participants the option to convert a fragment of their savings into guaranteed lifetime income through individual retirement annuities. 

U.S. retirement assets rose 7.9% in the second quarter of the year to $51.2 trillion, with individual retirement accounts and employer-sponsored defined contribution plans posting stronger growth than government pensions, according to a recent study from the Investment Company Institute. 

Equity mutual funds were the largest fund category within 401(k)s at $3.7 trillion. Hybrid funds, which include target-date funds, held $1.7 trillion, the study revealed.