Missouri Adding Terror-Free' Options to 529 Plan
September 10, 2007
The "Show Me" State of Missouri is about to show the 529 college savings plan marketplace just how innovative it can be.
Beginning Sept. 24, two new "terror-free" investment options will be added to the advisor-sold portion of the MOST Missouri Saving for Tuition Program. The Roosevelt Anti-Terror Multi-Cap Fund, the world's only certified terror-free fund, which invests in U.S. domestic companies, will become available, as will an actively managed international equity separate account that UMB Investment Advisors will manage.
UMB is the investment division of UMB Asset Management, a division of UMB Financial Corp., formerly known as United Missouri Bank.
Both investment options will employ the services of Conflict Securities Advisory Group of Washington to identify and screen out U.S. and foreign companies that have direct ties to countries known to support terrorist activities: Iran, North Korea, Sudan and Syria.
"We are excited to offer families all across the country a way to make sure their investments are terror-free while saving for their children's futures," said Missouri State Treasurer Sarah Steelman.
Treasurer Steelman has been a vocal proponent of terror-free investments and has put her state's money to the test by putting investments in The Missouri Investment Trust, an agency created to manage long-term assets for state cultural groups, under a terror-free mandate last year, when it contracted with State Street Global Advisors to manage an equities fund devoid of ties to terrorist nations. The state originally adopted the terror-free policy for the Trust fund in September 2005, marking the first time a U.S. public fund adopted a terror-free policy.
The UMB actively managed account marks the first time a terror-free investment option will be publicly available to individual, as well as institutional, investors. Beyond being included in Missouri's 529 plan, UMB hopes to parlay its new international terror-free investment option into pensions, Taft-Hartley plans and other markets, in particular those for police officers and firefighters, said Gary DiCenzo, executive vice president of UMB Asset Management. "Giving investors the choice is the critical piece," he said.
UMB has been managing assets for clients under various social mandates for years, applying both a top-down and bottom-up investment style, noted Gary Anderson, assistant portfolio manager, UMB Investment Advisors. UMB identifies what countries show promise, analyzes where in the economic cycle companies are, so as to identify appealing industries and sectors, and then looks for strong, healthy individual companies that fall within those arenas, he said. The managers will then screen for terror ties per Conflict Securities' recommendations.
The Roosevelt Anti-Terror Multi-Cap Fund, which now invests across all capitalizations in both value and growth stocks and uses political, economic regulatory and industry macro themes to guide choices, has been around in various forms since December 2001. That fact skews a pure performance return calculation for a fund invested under an anti-terror theme.
The current anti-terrorism fund originally launched as the Abacus Bull Moose Growth Fund and in September 2005, acquired the assets of another mutual fund. This past November, the fund changed both its name and its focus to include the anti-terrorism underpinning.
According to data from the College Savings Plan Network, the nationally available Missouri 529 Plan is one of the oldest college savings plans and as of June 30, 2007 had nearly $1.2 billion in assets. That represents about 1% of the overall $122 billion in assets held in all college savings plans.
Missouri's new anti-terror investment options, which will reside in the 529 plan alongside better known, traditional offerings from American Funds, Federated Investors, Franklin Templeton, Goldman Sachs, The Hartford, Putnam Investments and others, could very well bolster the state's 529 plan competitive advantage as anti-terrorism themes become more important and emerge as a new subsector of socially responsible investments, industry executives predicted.
"America wants to invest terror-free. The question was, who would be the first to get a product to market?" said Adam Pener, chief operating officer of Conflict Securities, the research and consulting firm that screens every single public company worldwide for even the loosest of ties to companies identified as terrorist nations by the U.S. government. It has developed a "do not invest" list of some 550 current companies that, depending upon the clients' expressed definitions of terrorist ties, could be screened out of portfolios.
The whole anti-terrorism movement began in 2001 within the pension marketplace with pension managers seeking to divest of such companies, Pener noted.
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