Products April 2, 2008

New Vanguard Fund Goes Global

April 2, 2008 (PLANSPONSOR.com) - Vanguard has filed a registration statement with the Securities and Exchange Commission for the firm's first passively managed global index fund.
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The Vanguard Global Stock Index Fund will offer three share classes – Investor Shares, Institutional Shares, and ETF Shares – that are expected to be available in the second quarter of 2008.

The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 countries, according to Vanguard.   Approximately 55% of the index is made up of stocks from outside the United States.

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The fund’s ETF Shares have an estimated expense ratio of 0.25%. The fund’s Investor Shares, which will require a $3,000 minimum initial investment, have an estimated expense ratio of 0.45%, and the Institutional Shares, with a $5 million minimum initial investment requirement, have an estimated expense ratio of 0.20%.

To offset the transaction costs associated with global investing and to protect the interests of long-term shareholders, the fund will assess a 0.15% purchase fee on all non-ETF share purchases and a 2% redemption fee on all non-ETF assets redeemed within two months of purchase, according to the announcement.

Three Vanguard funds currently track FTSE benchmarks:

  • Vanguard FTSE Social Index Fund,
  • Vanguard High Dividend Yield Index Fund, and
  • Vanguard FTSE All-World ex-US Index Fund.
Benefits April 1, 2008

Retirement Planning, Dieting Equally Hard to Start

April 1, 2008 (PLANSPONSOR.com) - In a survey of approximately 1,000 people across the country, the Bank of America found just as many Americans say that starting retirement planning is hard as those who say starting a diet or fitness routine is difficult.
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According to a press release on the survey findings, nearly one-third (30%) of Americans say that starting retirement planning is difficult, while 29% say the same about starting a fitness routine and 28% say the same about starting a diet. Only one-third of survey respondents report they are on track with their retirement planning efforts, and nearly one-quarter (23%) report they have not started planning at all.

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Respondents identified difficulty with respect to determining the types of investments they should make (42%), how much they will need to retire comfortably (40%), when to retire (33%), and where to begin (32%), the release said. Among affluent Americans surveyed, 34% reported difficulty with identifying appropriate retirement investments and 24% say they struggle with knowing how much they will need to retire comfortably.

The survey also found that despite Americans’ general familiarity with retirement products, many are not taking full advantage of them. Most Americans (79%) reported being familiar with 401(k) plans, but of those with access, 22% do not participate. Additionally, 68% of Americans report being familiar with IRAs; however, only 40% report having one. Less than half of Americans with IRAs (43%) fund them each year.

Among affluent Americans, 84% report they are familiar with traditional IRAs, and 62% say they are familiar with Roth IRAs; however, only 56% currently incorporate an IRA in their retirement planning. While affluent Americans are more likely to have an IRA than the general population, they are no more likely to fund it annually.

The survey was conducted by Braun Research via telephone between the dates of March 7-13, 2008, with 750 nationally representative Americans and 250 individuals with investable assets between $100,000 and $3 million.

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