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Age-Based Funds Selling Well in 529 Plans
November 26, 2007
Much as target-date funds are gaining traction in 401(k) plans, parents investing in 529 college savings plans are overwhelmingly preferring age-based funds that become more conservative as a child’s first year of college approaches, Investment News reports, citing speakers at the recent 529 Technical Conference.
About 75% of 529 plans now offer age-based options, said Marc Friedberg, a managing director with Wilshire Associates.
“We are strong believers in age-based options,” said John Heywood, principal of The Vanguard Group. “They are the predominant investment option for 529 plans now, and I think they still will be five years from now.”
Likewise, at Fidelity Investments, more than 70% of the $17 billion it manages in 529 plans are in age-based funds. “At the end of the day, age-based funds will lead the way,” said Fidelity Portfolio Manager Christopher Sharpe. “They are the appropriate place to be for investors in these plans.”
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