Vanguard fined more than $100 million by SEC over violations involving target date retirement funds

[BumRushDaShow]

Source: NBC News/CNBC

Jan. 17, 2025, 1:27 PM EST / Source: CNBC


Asset management giant Vanguard has been fined more than $100 million to settle charges related to disclosures around target date investment funds, the Securities and Exchange Commission announced Friday.

The alleged violations stem from a 2020 change where Vanguard lowered the minimum investment requirement for its institutional target date funds. The SEC order found that the change spurred redemptions as Vanguard customers moved from other target date funds into the institutional versions, creating taxable distributions for some of the remaining shareholders. The SEC said Vanguard failed to properly disclose the potential impact of the investment threshold changes on distributions.

“The order finds that, as a result, retail investors of the Investor TRFs who did not switch and continued to hold their fund shares in taxable accounts faced historically larger capital gains distributions and tax liabilities and were deprived of the potential compounding growth of their investments,” the SEC said in a press release.

The fine of $106.41 million will be distributed to harmed investors, the SEC said. Vanguard agreed to the fine without admitting or denying the SEC’s findings. Vanguard is one of the world’s largest asset managers, reporting more than $10 trillion of global assets as of last November. The firm was founded by Jack Bogle in the 1970s and has a reputation as a low-cost, investor friendly firm.

Read more: https://www.nbcnews.com/business/business-news/vanguard-fined-100-million-sec-violations-involving-target-date-retire-rcna188183

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Link to SEC PRESS RELEASE - Vanguard to Pay More Than $100 Million to Resolve Violations Related to Target Date Retirement Funds

[mahina]

1. Thank you. I was just looking at those funds trying to figure out where to put my IRA so it doesn't evaporate under the

New president

[paleotn]

2. In my opinion, the fees are way too high for what target date funds return over any significant time horizon.

There's a plethora of various and sundry index funds and index ETF's with very low fees. Enough in most good 401K plans to build a relatively diversified portfolio, and not have to shell out a lot of money to the fund managers. Plus a ton of basic info out there on how to diversify. Large cap, mid cap, small cap, bonds of various sorts, international markets, all tracking some index. They don't take a ton of brain power to run like actively managed funds, thus low churn and low fees.

I'm not looking for home runs, just steady growth, so they've always been my core. That's served us well in ups and downs. My personal philosophy as an investment non-guru. Your mileage may vary.