Vanguard Group is dropping 12 investment choices from its 401(k) plan for employees, nearly halving the number of investment options.
Effective June 26, the Vanguard Retirement and Savings Plan, Malvern, Pa., will offer 15 funds plus a target-date series, down from 27 funds and the target-date series, confirmed Laura Edling, a Vanguard spokeswoman.
"Like many companies, Vanguard regularly reviews its employee retirement savings plan, ensuring the investment choices reflect a broad range of risk tolerances and a balance of actively managed and index funds, while also leveraging leading plan design best practices," Ms. Edling wote in an email Wednesday. The plan will retain a mixture of actively managed and index funds, all of which are Vanguard funds.
Among the funds that will be retained are "building-block index funds," Ms. Edling wrote, referring to the Vanguard Total Stock, Vanguard Total Bond, Vanguard Total International Stock and Vanguard Total International Bond funds. The plan will keep "supplemental choices" such as the actively managed Windsor Fund, Wellington Fund, and PRIMECAP Fund, she added.
According to How America Saves 2018, Vanguard's annual review of its record-kept plans, the average plan offers 18 funds. On average, participants invest in 2.5 options, Ms. Edling wrote.
The Vanguard plan is cutting the following funds: Vanguard High Yield Corporate Fund, Vanguard Short-Term Inflation Protected Securities Index Fund, Vanguard Balanced Index Fund, Vanguard Institutional Index Fund, Vanguard Small-Cap Index Fund, Vanguard Selected Value Fund, Vanguard U.S. Growth Fund, Vanguard Morgan Growth Fund, Vanguard Windsor II Fund, Vanguard Extended Market Index Fund, Vanguard Explorer Fund and Vanguard International Value Fund.
"Vanguard employees do have a choice to reinvest their assets in the removed funds to any other available option," Ms. Edling wrote. "If an employee does not take action, the assets will be moved to an age-appropriate Vanguard Target Retirement Fund."
The Vanguard 401(k) plan had $4.57 billion in assets as of Dec. 31, 2016, according to the latest Form 5500.