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March 16, 2021
To: County of San Mateo, Deferred Compensation Advisory Committee
From: Vince Learned, NFP
Re: Vanguard Target Date Funds (TDFs) Reduced Expense Share Class Eligibility
Vanguard recently announced lower minimums for its less expensive institutional share class for its Target Date
Funds, for which your 457/401a plans qualify. It’s the same strategy, but just a more favorable, lower-cost share
class. The new, lower minimum is $5 million for the entire series.
The plan currently utilizes the investor share class, which has an average expense of about 0.14%. The
institutional share class has an expense of 0.09%. The resulting cost savings is 5 bps, or a reduction of almost
36%. Based on asset values of about $136M in assets in the Vanguard TDF series between the 457 and 401a
plans as of 9/30/2020, the dollar savings would equate to $68,000.
Additionally, based on prior Committee discussion, all available vintages (5-year increments rather than 10), may
be added, including the newly available 2065 vintage.
As there is no downside to the changes outlined above, and it would result in savings to participants, we
recommend expeditiously moving to the institutional share classes and adding all available vintages.
