Mutual funds in 529 plans (excepting large-blend stock funds) are actually cheaper than retail funds. And European drivers are more orderly on the highway than their American counterparts.

So says Morningstar's John Rekenthaler in his latest column, upon his return from Europe. Rekenthaler stands by his U.S. preferences ("big coffees, clean streets, and good ventilation" and the NBA), yet he prefers European drivers.

On the 529 issue, Rekenthaler gingerly steps into a fight between M*'s 529 researchers and Kansas State Treasurer Ron Estes. M* gave one of Kansas' three 529 plans a negative rating, and Estes fired back at what he called "Morningstar's misguided bias toward 'low fees.'" Rekenthaler then goes through the data and shows that, by and large, 529 investors are paying more than their retail counterparts. He worries in particular about the dilution of 529s' $200 billion-buying power across 84 different plans, and he compares the pricing to that of the Boeing 401(k) plan (six times cheaper than the Kansas 529 plan, on average). 

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE