The target date fund is made up of other funds, of which the equivalent funds purchased separately have a lower expense ratio. I keep meaning to exchange my 2045 funds for other individual funds, but, ya know, procrastination...
Anyway, for example, Target date 2045, which most of my $ is in, has a 0.16% expense ratio. If you look inside the 2045 fund, it looks like this:
1 Vanguard Total Stock Market Index Fund Investor Shares 54.3%
2 Vanguard Total International Stock Index Fund Investor Shares 35.6%
3 Vanguard Total Bond Market II Index Fund Investor Shares† 7.1%
4 Vanguard Total International Bond Index Fund Investor Shares 3.0%
(percents shown are allocation of total 2045 fund, not an expense ratio, lol!)
If instead I owned what I think are equivalent funds, the fees would be less for each fund, as follows:
VTSAX 0.05%
VTIAX 0.12%
VBTLX 0.06%
VTABX 0.14%
and with the majority of the fund allocation falling into the lowest expense ratio.
Yeah, these are all small expense ratios, even at 0.16%, and yeah, these are admiral funds ($10K min), but you can see that there are some savings to be had. Something to think about once your balance allows for admiral funds. Or for anyone else that happens to be reading this and thinking about moving a large amount to Vanguard.
