Richard, thanks for posting this. It is a big deal and I think you would get a lot more interest if you changed the title of your post to something like "Vanguard to offer new funds for retirees" or new managed payout funds or something along that line. And it possible, you should include a link to the source.

 Vanguard Managed Payout Funds

I found this link thanks to Joe on Investing During Retirement.

Paul 

FundHunter...

You got that RIGHT !!!

Everytime I see a new post on Vanguard offering a new fund... I am hoping that FINALLY they may be offering what we really need (well what many of us feel we need anyway, to complete our ideal portfolio)...  International Small or SV.

 I wonder how many more TWIST on US Equities they will implement before adding IS or ISV.

 Trev H

I placed the below post on Investing During Retirement, that was given to us by Joe.

I guess I am surprised that there has not been more comments on the Vanguard Diehard Forum. I would be interested in hearing some opinions, from the "hardcore" members and Bogleheads:

"I do feel that Ron and Billym have made some interesting observations or opinions of the proposed new Vanguard funds, specifically, positioned for the withdrawal stage, as an investment tool.  I believe it is to early to know what type of vehicle or vehicles we will be dealing with...and they will probably evolve once they are made available to investors.

Will the goal be primarily that of Income & Dividend investing, or will the primary goal  be that of true capital preservation and growth, with the guarantteed service of the Vanguard Team assigned to each fund, automatically, rebalancing and distributing an income (3%,5% or 7% annually) on a monthly basis.

I see this offer as Vanguard's answer to the Insurance companies' Annuity vehicles ,as a competitive venture,of trying to guarattee income, but, at the same time telling the investor that they will have "a team" of professionals working to preserve and grow their capital.  In other words, I see them telling investors such as ourselves, that you do not have to purchase an Annuity/or give up part of your capital, for a guarantteed income during retirement.  They may very well be able to sustain a 3% and 5% income-guarantted fund(s), it may be trickier to guaranttee the 7% income-vehicle...but, I believe that they feel they have a 'past historical record' of being able to do so, over a long-term period (10-20 year block) of time.

Just an opinion...but, it will certainly be interesting, as all the Boomers begin to truly peak...and seek safer havens to place their monies and have a guarantteed income as they reach and live through retirement..."

Curanderotk 

While I agree with others here that we really need some offerings in the missing asset classes that some of us would like to see, I think this new fund is a great idea. It seems to incorporate a lot of ideas that have been discussed and hashed out here (thanks to Larry Swedroe and others) over the past several months, i.e., TIPS, CCFs, bonds, international, etc., also safe withdrawl rates vs. asset size. For someone in retirement who wants a simple solution without having to hold several funds and figuring out how to rebalance, this looks like it could be a winner -- sort of a target retirement income fund, but on steroids.

Dan

P.S. -- BTW, TrevH and others, I finally gave up on an international SCB or SCV fund and went with T.Rowe Price Int'l Discovery (PRIDX).

I thought I knew a moderate amount about investing, but I have never heard of any fund like these funds..  They sound intriguing.  I may consider such a fund when I get to retirement.  By then, I will have almost two decades of history to review.

Petrocelli 

Trev H & Fund Hunter:

Had the same feeling when I saw Vanguard filing for 
new fund...had a glimmer of hope we were finally getting
an international small cap index fund.....don't give up hope
it will happen one day !

Wilson

If I'm reading them right, Fidelity's plans will provide a fixed dollar amount for a fixed number of years.  If things go well, you'll get paid for all those years, and maybe even have some money left over at the end.  If not, your investment will be depleted (and no more payments) before the end of the term.  So it's like a term "certain" fixed immediate annuity, except that you, and not the provider, assume the risks.

Vanguard's plans are more like variable immediate annuities.  They adjust their payouts depending on how the investments did over the past three years.  This would seem to significantly reduce the chance of running out of money, but at the cost of more uncertainty in the amount paid. (You can also select different payout ratios so that you are likely to (a) build equity, (b) preserve nominal value, or (c) deplete the investment over time.)

Either way you assume the risks, which is why there's no insurance fee or guarantee.

freeland:

 (You can also select different payout ratios so that you are likely to (a) build equity, (b) preserve nominal value, or (c) deplete the investment over time.)

The choices are (a) build equity in real terms, (b) preserve equity in real terms, and (c) preserve equity in nominal terms.  

I'm dubious about (c) - having a 7% draw down, and not reaching zero value over an arbitrarily long period of time (which is why I mentally tranformed that into deplete over time as I wrote in the previous post). 

International Explorer is a closed fund, no new investors
can get into the fund.....that is why an international small
cap index fund would be ideal, index funds never have to
close as assets increase.

Wilson