VALLEY FORGE, Pa.--(EON: Enhanced Online News)--Vanguard today announced expense ratio reductions on investments in The Vanguard 529 College Savings Plan, resulting in an estimated $3.5 million in savings for the Plan’s nearly 140,000 clients.
“As tuition prices continue to rise, Vanguard believes investors should have access to low-cost college savings plans”
The price reductions to the Plan are the sixth since its introduction in 2002. They take effect October 31, 2013, and will apply across nearly all of the plan’s investment options, including the popular age-based and index portfolios:
- Clients invested in one of the plan’s three age-based portfolios will see their all-in fees decrease from 0.25% ($2.50 per $1,000 invested) to 0.21% ($2.10 per $1,000 invested).
- Clients invested in one of the plan’s 19 individual portfolios will see their all-in fees decrease from the current range of 0.25% to 0.55% to a range of 0.21% to 0.50%.
“As tuition prices continue to rise, Vanguard believes investors should have access to low-cost college savings plans,” said John Heywood, principal, Vanguard’s Education Savings Group. “The robust growth in the Vanguard 529 College Savings Plan has permitted us to further reduce the cost of saving for college.”
The Plan is sponsored by the state of Nevada and is open to investors across the country. Roughly 50% of the Plan’s $8.6 billion in assets are invested in broadly diversified, age-based portfolios, which are designed to help investors stay appropriately diversified over time. The age-based portfolios maintain allocations to broad markets, such as U.S. stocks, U.S. bonds, and international stocks, and adjust automatically to more conservative allocations as college gets closer.
Top Rating From Morningstar
Last week, Morningstar, an independent firm that provides fund information and analysis for investors, awarded the Vanguard 529 College Savings Plan its highest Gold Analyst Rating. Of the 64 plans the firm’s analysts evaluated for 2013, which account for 98% of the $181 billion held in all 529 savings plans, only three others received the Gold rating. Morningstar analyst ratings are based on the evaluation of how well the plan does in five key areas—Process, Performance, People, Parent, and Price—which they consider essential to long-term outperformance on a risk-adjusted basis.*
Lowering the Cost and Complexity of Investing
Since its founding, Vanguard has been committed to lowering the cost and complexity for investors saving for retirement and college. As part of its more recent efforts to deliver cost savings on its range of products and services, the firm has:
- Transitioned benchmarks for six international stock index funds to FTSE benchmarks and 16 U.S. stock and balanced index funds to University of Chicago’s Center for Research in Security Prices indexes. The move is expected to result in considerable cost savings over time.
- Reported expense ratio reductions for 55 Vanguard ETFs since April 2012.
- Made ultra-low-cost Admiral Shares on its index funds more broadly available to clients. Retail clients now have access to Admiral Shares for an additional eight index funds; advisor and institutional clients are no longer subject to minimum requirements on Admiral Shares of 41 index funds.
- Announced plans to introduce Admiral Shares of the $20 billion Vanguard Dividend Appreciation Index Fund, which will bring to 50 the number of Vanguard index funds offering Admiral Shares.
A 529 Plan Leader
Vanguard manages $49 billion in college savings assets across 29 college savings plans and five prepaid tuition plans in 30 states. Vanguard brings nearly 40 years of investment management expertise and low costs to the 529 plan market. The firm offers a broad array of index, aged-based, and actively managed investment options.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages nearly $2.3 trillion in U.S. mutual fund assets, including more than $300 billion in ETF assets. The firm offers more than 160 funds to U.S. investors and more than 100 additional funds in non-U.S. markets. For more information, visit vanguard.com.
All asset figures are as of September 30, 2013, unless otherwise noted.
* The Morningstar Analyst Rating® for 529 College-Savings Plans is not a credit or risk rating. The rating is the subjective summary expression of the firm's forward-looking quantitative and qualitative analysis of a 529 college savings plan. Analyst Ratings are assigned on a five-tier scale running from Gold to Negative. The top three ratings (Gold, Silver, and Bronze) indicate that Morningstar's analysts think highly of a 529 plan; the differences correspond to the level of analyst conviction in the ability a plan's investment options have to collectively outperform their respective benchmarks and peers through time, within the context of the level of risk taken. The Analyst Rating seeks to evaluate each plan’s investment options within the context of its objectives, appropriate benchmarks, and peer groups. Usually annually (although subject to change), Morningstar evaluates 529 plans in five different areas—process, performance, price, parent, and people—and assigns an Analyst Rating for more than 50 529 plans. Gold plans are the analysts' highest-conviction recommendations. By giving a plan a Gold rating, Morningstar analysts are expressing an expectation that the plan's investment options collectively will outperform their relevant performance benchmarks and/or peer groups within the context of the level of risk taken over the long term (defined as a full market cycle or at least five years). Plans earning Silver or Bronze medalist ratings are also viewed positively by Morningstar analysts, have notable advantages, and are likely to outperform their peers. A Neutral rating indicates plans that are not likely to deliver standout returns, but are also unlikely to significantly underperform. A Negative rating indicates, in Morningstar’s view, that a plan’s investment options have at least one major flaw likely to significantly hinder future performance. While these ratings can help with the selection process, they should not be the only factor used to choose the investment. For more information about the Analyst Ratings, as well as other Morningstar ratings and fund rankings, please visit Morningstar.com.
For more information about Vanguard funds and ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
For more information about The Vanguard 529 College Savings Plan, call 866-734-4530 or visit www.vanguard.com to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter.
If you are not a Nevada taxpayer, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by State Treasurer Kate Marshall. The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Upromise Investments, Inc. serves as Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the plan.
All investments are subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
Vanguard Marketing Corporation, Distributor and Underwriter.
© 2013 The Vanguard Group, Inc. All rights reserved.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.