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Wednesday, September 29, 2010

Vanguard Bets on Lower 529 Fees

News summary by MFWire's editors

Vanguard [see profile] is cutting its 529 prices. Yesterday the Valley Forge, Pennsylvania-based mutual fund firm and Nevada State Treasurer Kate Marshall revealed that Vanguard slashed fees in the $4.5 billion, 170,000-account, Nevada-sponsored Vanguard 529 College Savings Plan. Fees for the age-based options will drop from 44 basis points to 25 basis points, while fees for the other portfolios in the plan will fall from between 44 and 66 bps to between 25 and 55 bps, and Nevada expects the plan participants to save $8.5 million per year thanks to the fee cuts.

Earlier this month, Nevada added Putnam as an advisor-sold 529 provider, alongside Columbia (see The MFWire, 9/16/2010). (On the direct side, Nevada has the Vanguard plan, as well as the USAA College Savings Plan and the Upromise College Fund 529 Plan.)

Marshall praised Vanguard's move as "great news for families working hard to save for their children's future college education costs."

"This is the fourth Nevada College Savings Plans program fee reduction we have announced in the past 18 months," Marshall stated.

The Associated Press, Boston Globe, Financial Planning, InvestmentNews, the Nevada Appeal and TheStreet all covered the news.


State Press Release

Carson City—State Treasurer Kate Marshall announced today that one of the major college savings plans programs administered by her office has agreed to cut their fees to account owners by almost half. Effective October 15, 2010, The Vanguard 529 College Savings Plan, one of the Nevada College Savings Plans program direct-sold plans, is slicing its fees for age-based options from 44 basis points (0.44%) to a mere 25 basis points (0.25%). Expenses on the Plan’s 19 other individual portfolios are also being reduced. The Vanguard 529 Plan is now one of the lowest priced college savings plans available.

“This is great news for families working hard to save for their children’s future college education costs, as the significant lowering of fees for Vanguard 529 College Savings Plan account owners will assist families in saving for a better tomorrow for their children,” Marshall said. “The Nevada College Savings Plans Board and my office continue to work diligently on lowering fees for families making the effort to save for their children’s higher education needs. In fact, this is the fourth Nevada College Savings Plans program fee reduction we have announced in the past 18 months.”

Vanguard Chairman and CEO Bill McNabb said, “Low costs are among the largest contributors to a portfolio’s long-term success. The less a college saver spends on expenses, the more of their investment returns they can keep working toward their college savings goals. We’re pleased to help lower costs for Vanguard 529 College Savings Plan investors.”

Marshall added she is appreciative of Vanguard and the Nevada College Savings Plans program manager, Upromise, commitment to delivering savings to families during these tough economic times. “My office has worked closely and cooperatively with Vanguard and Upromise to offer Nevada families and those across the nation an enhanced opportunity to save for college through further reductions of fees.”

The Vanguard 529 College Savings Plan has assets of over $4.5 billion dollars, with some 170,000 account owners nationwide, including 2,300 Nevada families. The fee reduction is estimated to result in a savings to The Vanguard 529 College Savings Plan account owners of about $8.5 million annually.

The Nevada College Savings Plans program, with total assets of $6 billion, currently has more than 430,000 account owners. This is the second investment manager to lower fees for account owners this year. Earlier, Upromise Investments Inc., the program manager for the Upromise College Fund 529 Plan, lowered its fees for the second time in less than one year. Currently, three of Nevada’s College Savings Plans programs —Vanguard, Upromise, and USAA—are ranked in the top ten for 3-year performance by savingforcollege.com, an independently sponsored website dedicated to assisting parents and students with planning for college.

Marshall also recently announced the addition of Putnam Investments to serve as program manager for the state’s 529 College Savings Plan sold nationwide through financial advisors. The Putnam 529 Plan for America, available to Nevada residents and to individuals nationwide, contains a mix of diversified and competitively priced investment choices designed to provide a range of offerings based on risk tolerance, time horizon, and desired investment approach. Putnam, which currently manages the 4th largest college savings advisor-sold plan in the nation, has assets over $3 billion.

For more information about how you can begin to “Save for College, One Step at a Time,” go to nevadatreasurer.gov, or call (702) 486-2025 or 1-888-477-2667 (toll free).


Company Press Release

VALLEY FORGE, PA, September 28, 2010—Vanguard will lower the cost of saving for college by reducing expense ratios on The Vanguard 529 College Savings Plan by nearly half on some portfolios. More than 100,000 clients may benefit from an estimated $8.5 million in annual savings as:

* Those invested in one of the plan’s three age-based options will see their all-in costs reduced from 0.44% (or $4.40 per $1,000 invested) to 0.25% (or $2.50 per $1,000 invested).
* Those invested in one of the plan’s 19 individual portfolios will see their all-in costs reduced from between 0.44% and 0.66% ($4.40-$6.60 per $1,000 invested) to between 0.25% and 0.55% (or $2.50-$5.50 per $1,000 invested).

“It’s important to keep investment costs low in your college savings plan, as every dollar lost to expenses puts you a dollar further from your college savings goals,” said Vanguard Chairman and CEO Bill McNabb.

The Vanguard 529 Plan, sponsored by Nevada and open to any investor, is a simple way to save for future college costs. When saving in a 529, it’s important to remember that investment returns are not guaranteed, and you could lose money by investing in the plan.

As assets in the $4.5 billion Vanguard 529 Plan have increased, Vanguard has worked with the State and program manager Upromise Investments, Inc. to deliver cost savings to plan investors. This is the fifth time that clients have seen costs reduced since the plan was introduced in 2004. The new expense ratios become effective October 15, 2010.

Vanguard and its partners in the 26 state-sponsored 529 plans that feature Vanguard investments continue to seek ways to lower costs for college savers. Most recently, Vanguard partnered with College Savings Iowa to reduce its all-in plan expenses by one-third. In August, the New York's 529 Direct Plan, the nation’s largest direct-sold 529 college savings plan, cut its expense ratios nearly in half. Earlier this year, MOST Missouri’s 529 Plan and the Pennsylvania 529 Investment Plan also announced lower all-in plan costs.

About Vanguard
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of 529 college savings plans. Vanguard manages nearly $1.4 trillion in U.S. mutual fund assets, including nearly $28 billion in 529 plan assets invested in 26 plans in 25 states. Vanguard offers more than 170 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.

# # #

All asset figures are as of August 31, 2010, unless otherwise noted.

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.

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.

Before you invest in any 529 plan, consider 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

For more information about the College Savings Iowa 529 Plan, call 888-672-9116 or visit www.collegesavingsiowa.com to obtain a Program Description. Investment objectives, risks, charges, expenses, and other important information are included in the Program Description; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter.

College Savings Iowa is an Iowa trust sponsored by the Iowa state treasurer’s office. The Treasurer of the State of Iowa sponsors and is responsible for overseeing the administration of the College Savings Iowa 529 Plan. The Vanguard Group, Inc., serves as Investment Manager and Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., assists the Treasurer with marketing and distributing the Plan. Upromise Investment Advisors, LLC provides records administration services. The plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds.

For more information about New York’s 529 College Savings Program Direct Plan, obtain a Program Brochure and Tuition Savings Agreement at www.nysaves.org or by calling 1-877-NYSAVES. This includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.

The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Direct Plan. Upromise Investments, Inc. and Upromise Investment Advisors, LLC serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. The Vanguard Group, Inc. serves as the Investment Manager. Vanguard Marketing Corporation markets, distributes and underwrites the Direct Plan.

For more information about MOST—Missouri’s 529 College Savings Plan, call 1-888-414-MOST or visit www.missourimost.org to obtain a Program Description, Privacy Policy, and Participation Agreement. Investment objectives, risks, charges, expenses, and other important information are included in this document; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter.

The Missouri Higher Education Savings Program (the “Program Trust”) is a trust created by the State of Missouri. When you invest in MOST—Missouri’s 529 College Savings Plan (the “Plan”), you are purchasing portfolio units issued by the Program Trust. Portfolio units are municipal securities. The Plan has been implemented and is administered by the Missouri Higher Education Savings Program Board (the “Board”). Upromise Investments, Inc., and Upromise Investment Advisors, LLC, serve as the Program Manager and Recordkeeping and Servicing Agent, respectively, with overall responsibility for the day-to-day operations, including effecting transactions. The Vanguard Group, Inc., and American Century Investments serve as Investment Managers for the Plan. Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., markets and distributes the Plan. The Plan’s portfolios, although they invest in mutual funds, are not mutual funds

For more information about the Pennsylvania 529 Investment Plan, call 800-294-6195 or visit www.makecollegepossible.com to obtain a Disclosure Statement. Investment objectives, risks, charges, expenses, and other important information are included in the Disclosure Statement; read and consider it carefully before investing. Vanguard Marketing Corporation serves as Distributor and Underwriter.

The Pennsylvania 529 Investment Plan is authorized by the Commonwealth of Pennsylvania and administered by the Pennsylvania Treasury Department. Upromise Investments, Inc., and Upromise Investment Advisors, LLC, serve as the Program Manager and Recordkeeping and Servicing Agent, respectively, with overall responsibility for the day-to-day operations, including effecting transactions. The Vanguard Group, Inc., serves as Investment Manager for the Investment Plan. The Investment Plan’s portfolios, although they invest in mutual funds, are not mutual funds. 

Edited by: Neil Anderson, Managing Editor


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