The Vanguard Group [profile] has been a closed shop when it comes to offering target-date funds from other asset mangers to its 401(k) clients. Now that is changing.

This week the Valley Forge, Pennsylvania-based mutual fund giant informed some clients that it would allow non-proprietary target-date mutual funds to be used in the 401(k) plans that it recordkeeps.

Vanguard provided recordkeeping and investment services to more than 3.4 million participants in nearly 2,400 plans at the end of March.

Spokeswoman Linda Wolohan confirmed the move to MFWire. She said that the change to Vanguard's policy on non-proprietary target dates was kept hush hush because there are only "very few clients who have asked for it."

"But it's still very important," Wolohan explained.

Wolohan declined to reveal which Vanguard clients asked for non-Vanguard target-date funds.

Word of Vanguard's decision moved quickly through the community of defined contribution investment-only (DC I-O) specialists this week. The national sales manager of a West Coast DC I-O player told advisors of the news at a private meeting held for New York City area retirement plan advisors on Wednesday. Most of the advisors at the meeting had not yet heard the news.

That sales manager said he is taking a "wait and see" attitude on whether Vanguard will open to many plans or if the move is just a "marketing ploy."

"Vanguard seems to have caved a little bit," said the source. "I think it's going to be hard to compete on the Vanguard platform."

He explained that Vanguard's clients have typically made their decision based on price and Vanguard's target-date funds are among the least expensive.

Vanguard's concession to outside funds could open the door to mutual fund firms that have been locked out of many plans. Vanguard, Fidelity and T. Rowe Price are among the largest 401(k) platforms and each has been mostly closed to outside target date funds.

Meanwhile, a number of asset managers including BlackRock, Allianz, American Century, Goldman Sachs and Pimco have been creating target date funds as a way to gather assets in the defined contribution channel. 

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