2 Approaches to Adjusting the Asset Mix in 529 Plans
Hands-off college-savers should know whether their age-based investments slide or step down the glide path over time.
Jeff Holt: This week we released our updated Morningstar Analyst Ratings for more than 60 529 college savings plans. In evaluating these plans, we remain mindful of the experience of the hands-off investor. For these investors, 529 plans commonly have an all-in-one strategy that uses a beneficiary's age to determine the appropriate mix of assets. But investors should be aware of two distinct approaches to adjusting the asset mix.
Similar to target-date funds in retirement plans, progressive age-based funds gradually become more conservative over time, shifting emphasis from stocks to bonds. Investors simply stay in the same fund over time. A couple of our most highly rated plans that have progressive funds include Gold-rated Virginia529 inVEST and the Silver-rated Maryland College Investment Plan.