Vanguard Target Retirement Income

Class Inv (VTINX)
4 / 5 Stars
4 4 5 5 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
4 / 5 Stars
C+ (Hold)

#3 in Retirement Income

U.S. News evaluated 61 Retirement Income Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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The fund has returned 9.73 percent over the past year, 6.60 percent over the past three years, 8.59 percent over the past five years, and 5.79 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 4.4%
1 Year 9.7%
3 Years (Annualized) 6.6%
5 Years (Annualized) 8.6%
10 Years (Annualized) 5.8%

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This fund is kind of like a value meal. Instead of buying your stock and bond funds separately, you buy one product and get a bunch of funds packaged specifically for retirees. “It’s a solid one-stop option,” Morningstar analyst David Falkof says, especially for investors who don’t want to wade through pages of research to find the right portfolio allocation for retirement.

As of July 03, 2014, the fund has assets totaling almost $11.04 billion invested in 6 different holdings. Its portfolio consists of seven other Vanguard stock and bond funds.

In late September 2010, Vanguard announced plans to consolidate the underlying funds in its target retirement fund series over 12 months. Three underlying international portfolios—Vanguard European Stock Index, Vanguard Pacific Stock Index, and Vanguard Emerging Markets Stock Index—will be replaced with a single, broad international stock index fund to ramp up international equity exposure. “The increased international allocation will incrementally increase diversification and hence, marginally reduce the volatility of the funds over the long term,” said Vanguard chief investment officer Gus Sauter in a press release. Sauter also noted that the change will reduce the “home bias” of the funds.

Its holdings in large-cap stocks and high-quality bonds has helped the fund ride out the tumultuous market over the past couple of years, and according to Morningstar, Vanguard’s Retirement Income Fund landed in the top 15 percent of its category over the past trailing five-year period, despite its above-average equity weighting. The fund has returned 9.73 percent over the past year and 6.60 percent over the past three years.

The fund’s diverse asset mix and the strong performance of its underlying funds have helped it deliver fairly steady returns over the long term. The fund has returned 8.59 percent over the past five years.

Investment Strategy

Intended for investors already in retirement, the Vanguard Retirement Income Fund seeks to provide a steady stream of income and some capital appreciation by investing in a mix of seven Vanguard index stock and bond funds. The fund is passively managed, meaning that it seeks to at least match its benchmark, the MSCI All Country World index. This fund is the most conservative of Vanguard’s retirement income products and generally keeps about 70 percent of assets in bonds and cash, and about 30 percent in domestic and international stocks.

Role in Portfolio

Morningstar calls this fund a “core” holding.


The fund is composed of a slew of other Vanguard funds, so multiple managers and analysts affect the fund’s ultimate performance. Duane Kelly, advisor for the fund since 2003, manages day-to-day activities while John Ameriks and John Hollyer lead separate investment counseling and risk-management teams to address asset allocation and strategy.


Vanguard Target Retirement Income has an expense ratio of 0.00 percent.

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As with other retirement income products, this fund is not a guaranteed source of income.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 5 for one year, 4 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 1 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

The fund appears on the 2011 Money 70 list of recommended mutual and exchange-traded funds.

Money 70

In the annual Lipper/Barron’s Fund Families Survey of 2010, the Vanguard Group ranks 25 out of 57 fund families surveyed.

Lipper 2011-04-05