Joining the march to provide some sense of security to more than 75 billion retiring U.S. baby boomers, the Vanguard Group Monday opened its own set of managed payout funds.

The fund giant is joining Fidelity Investments and Charles Schwab & Co. as other major industry players recently coming out with similar portfolios. (See related analysis).

Managed payout funds seek to provide a steady stream of income for investors. Managed payout funds basically try to take the stress of trying to juggle percentages of how much someone living on a fixed income needs to be taking out of their nest eggs every month, quarter or year. Retirees simply need to figure out what they require to live comfortably and managed payout funds will provide them with a target range of what the funds are expected to return given the amount available.

Managed payout funds have been compared to fixed immediate annuities and are also known as retirement income funds. The major difference is that unlike with fixed annuities, there's no guarantee on how much they'll actually pay out.

But like annuities, managed payout funds come with lots of caveats. Managed payout funds are most likely to appeal to those who aren't familiar with rebalancing or managing their own payout schedules with little or no income being generated.  Critics warn these can be very generic ways to handle income streams for those needing to live on a fixed income.

Still, many advisors point out that managed payout funds do provide a level of support that didn't exist to many uneducated investors. And much like popular target date retirement funds that target the most novice of investors, managed payout funds are coming out designed to be tailored to different needs. Vanguard is wading into such waters by taking a three-pronged platform to avoid such a cookie-cutter approach that concerns some industry observers.

As a result, the targeted amount of Vanguard's distributions will come in three flavors through three different funds. "Each fund is designed to function much like an endowment by investing over the long term to preserve or build capital while generating monthly payments," Vanguard said in a statement.

The trade-off between set rates paid and a more flexible yet targeted approach is that these managed payout funds charge much less in fees than most insurance-wrapped annuity products.

The trio Vanguard's bringing out will charge between 0.57% and 0.58%. And unlike many annuities, they'll allow investors to take their money out without any penalties or extra fees. The funds aim at payouts between 3-7% each, depending on how aggressive their mandates are.

The funds are structured as funds of funds. They'll invest in Vanguard domestic and international stock index funds, bond and REIT index funds and inflation-protected securities and money market instruments.

An interesting note is that Vanguard's allowing these payout funds to invest in a fairly wide range of alternative investment classes. They'll be able to invest in commodities, currencies, derivatives and other hybrid securities. And their mandates include both taking short positions as well as long positions.

Such commodity-linked and market neutral strategies "are expected to add diversification and result in a more consistent return pattern than a traditional balanced portfolio of stocks, bonds and cash," Vanguard said in announcing the new funds.

The new payout funds (which require an initial investment of at least $25,000) are:

• Vanguard Managed Payout Growth Focus Fund (VPGFX). It seeks to make monthly distributions of cash with inflation-protection and capital appreciation built in over time as well.
• Vanguard Managed Payout Growth and Distribution Fund (VPGDX). This portfolio is geared at making monthly distributions of cash with inflation taken into account. But it differs from VPGFX in that it seeks capital preservation rather than growth.
• Vanguard Managed Payout Distribution Focus Fund (VPDFX) is even more conservative, placing capital preservation as its intended goal.

Interestingly enough, while others are expected to join the payout fund ramp-up in the near future, Vanguard's rollout comes with pricing similar to its existing variable annuities lineup.

Its average annual expenses for those types of annuities, which also don't come with set return guarantees, is around 0.57%. That includes all insurance as well as underlying fund expenses.