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MMBB Welcomes Target Date Funds to Its Fund Family

June 01, 2020

News

MMBB is pleased to announce the addition of Vanguard Target Date Funds (TDFs) to our fund offerings. MMBB Vanguard TDFs, available since January 2, 2020, enhance our products and services to members.

MMBB Vanguard TDFs are a complete and well diversified portfolio all-in-one fund. Each TDF is a combination of up to five Vanguard Index Funds that potentially offers exposure to small-, mid-, and large cap domestic (U.S.) and international stocks, as well as domestic and international bonds. Vanguard’s TDFs have a history of consistent performance relative to respective benchmarks.*

After members expressed interest in TDFs, MMBB decided to add Vanguard TDFs to its platform. Vanguard is currently the investment manager of several MMBB funds, including our U.S. Bond Fund and U.S. Equity Index Fund.

MMBB Vanguard TDFs 101

MMBB Vanguard TDFs make saving for retirement easier. The TDF offering includes 11 separate Vanguard Target Retirement Funds for a specific retirement time frame (see the fund list below). You simply select the TDF that most closely corresponds to the year in which you plan to retire.

Years Until Retirement Fund Name
45 Vanguard Target Retirement 2065 Fund
40 Vanguard Target Retirement 2060 Fund
35 Vanguard Target Retirement 2055 Fund
30 Vanguard Target Retirement 2050 Fund
25 Vanguard Target Retirement 2045 Fund
20 Vanguard Target Retirement 2040 Fund
15 Vanguard Target Retirement 2035 Fund
10 Vanguard Target Retirement 2030 Fund
5 Vanguard Target Retirement 2025 Fund

0

Vanguard Target Retirement 2020 Fund
NA Vanguard Target Retirement Income Fund (Investment strategy to provide retirement income)

* According to the Vanguard Group’s data, 87 percent of Vanguard no-load mutual funds performed better than their peer-group averages over the past 10 years. Vanguard TDFs are no load funds, which means they charge no sales fees either on the front end (when you buy fund shares) or the back end (when you sell fund shares).

The asset mix in these TDFs gradually and automatically becomes more conservative as you approach and enter retirement. They reduce the proportion invested in riskier assets, such as stocks, and increase the number of less risky assets, such as bonds. When the investment reaches its target date, the gradual move from stocks to bonds simply continues.

The TDF Glidepath to Retirement

More specifically, the typical Vanguard target-date strategy – assuming someone retires at 65:

  1. Starts with 90 percent equity exposure and 10 percent bond exposure until the investor is age 40.
  2. Glides down to a composition of 50 percent stocks and 50 percent bonds by the time the investor is age 65.
  3. Decreases the number of equities in the portfolio to 30 percent and increases bond holdings to 70 percent by age 72, which is Vanguard’s “landing point.” This allocation stays that way through retirement.

You’re never locked into a particular investment. Just like MMBB’s other investment options, members can make changes to their TDF allocations at any time. Should your tolerance for risk change or should you decide to retire earlier or later, you can switch TDFs or redirect your investments from TDFs to other investment options at any time.

Benefits Galore

An advantage of MMBB Vanguard TDFs is that they reallocate assets over time in an age appropriate way, which automatically reduces the risk in the portfolio for members. In other words, if you’re interested in a single retirement fund, TDFs automatically rebalance your portfolio as you age.

MMBB Vanguard TDFs offer members several other benefits. They:

  • Are low-cost mutual funds, so they are a cost-effective approach to risk-appropriate retirement savings.
  • Rely on Vanguard’s extensive research and investment allocation expertise. Vanguard is the second largest mutual fund provider in the world.
  • Are managed by a provider that members already know.
  • MMBB Vanguard TDFs can be used to and through retirement through the Target Retirement Income Fund.
  • Also allows those who are already retired to move their non-annuitized investments into the Target Retirement Income Fund.
  • Are based on up to five underlying index funds managed by Vanguard that are easy to understand.
  • Increase your options for investing for retirement.

As a benefit of membership, MMBB has CERTIFIED FINANCIAL PLANNER™ professionals available to answer your questions about MMBB Vanguard TDFs or talk with you about whether TDFs might fit into your financial plan. For more information or a no-obligation consultation, please contact us at [email protected] or 800.986.6222.

The information contained herein is for informational purposes only. While MMBB made every attempt to ensure that the information is accurate, MMBB is not responsible for any errors or omissions or the results obtained from the use of this information. MMBB is not liable for any success or failure that is directly or indirectly related to the use of the information contained herein. The information contained herein does not constitute any financial, insurance, investment, legal, or tax advice. In no event shall, MMBB and/or its fiduciaries, directors, officers, employees, or agents thereof be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in action of contract, negligence or tort, arising out of or in connection with the use of the information contained herein.

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