American Funds' 529 plan catching up with the times

American Funds' 529 plan catching up with the times
The addition of college target date funds will give American Funds' $33 billion CollegeAmerica 529 Savings Plan a similar menu of options as other 529 plans, the majority of which already offer advice-embedded products.
JUL 02, 2012
By  JKEPHART
American Funds plans to bring its 529 savings plan up to speed with the rest of the industry by launching its first college target date funds this September. The addition of college target date funds will give American Funds' $33 billion CollegeAmerica 529 Savings Plan a similar menu of options as other 529 plans, the majority of which already offer advice-embedded products. “American was always the big anomaly,” said Janet Yang, analyst at Morningstar Inc. The CollegeAmerica plan is offered only through financial advisers, so American Funds was content to let the adviser develop its own allocations based on time horizon and risk tolerance using its funds. However, lately demand from advisers for one-stop offerings has been on the rise, said Chuck Freadhoff, spokesman. “What we're doing is simply responding to adviser requests to make it easier to do business with us,” he said. Target date funds in 529 plans have proved to be as popular as target date funds in retirement plans, Ms. Yang said. “‘Set it and forget it' options are usually the most popular,” she said. Popular funds would be a change of pace for American Funds. Despite being an adviser favorite and the second-largest mutual fund family, it's been nearly three years since the mutual funds had net inflows. In the first quarter, the fund family shed another $16 billion; no other fund family in the top five in terms of assets had net outflows. The American Funds College Funds will have target date funds ranging from 2012 to 2030 and be managed along an 18-year glide path. The funds will gradually shift from primarily growth and income funds at inception to more conservative equity and income and bond funds as they reach the target date. American Funds did not disclose expense ratios in a filing with the Securities and Exchange Commission. American Funds is also planning on launching similar pre-mixed portfolios of its funds that target goals such as income or growth next month. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20120115/REG/301159992 “All of a sudden they're launching all of these pre-mixed portfolios. It's kind of surprising,” Ms. Yang said. “Any kind of tools to help advisers manage portfolios has got to help, though.”

Latest News

Social Security trustees see one less year in insolvency countdown, project shortfall to start 2034
Social Security trustees see one less year in insolvency countdown, project shortfall to start 2034

New report shows dimmed outlook for benefits to retirees and disabled Americans, creating further pressure for federal tax hikes or more borrowing.

NY Republican Stefanik presses SEC to probe Harvard bond sale
NY Republican Stefanik presses SEC to probe Harvard bond sale

Open letter to SEC Chair Paul Atkins questions whether the Ivy League university withheld material information prior to its $750 million taxable bond offering.

Ex-LPL leader re-emerges at The Wealth Consulting Group
Ex-LPL leader re-emerges at The Wealth Consulting Group

The Las Vegas-based hybrid RIA overseeing $8.8 billion in assets has named Andy Kalbaugh president to help scale its advisor platform.

Envestnet extends investment offerings with new alts model portfolios
Envestnet extends investment offerings with new alts model portfolios

The wealth tech giant – in collaboration with Fidelity, BlackRock, State Street, and Franklin Templeton – is offering its advisor and wealth firm users more ways to diversify.

Just as wealth industry M&A was picking up, economic uncertainty could kill it again
Just as wealth industry M&A was picking up, economic uncertainty could kill it again

Deal volume increased post-election but now caution has taken over.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave