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Rating:Rocky Mountain State Chooses Vanguard Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, August 10, 2004

Rocky Mountain State Chooses Vanguard

Reported by Theresa Sim

Vanguard has won a contract to offer a direct-sold 529 plan for the state of Colorado, CollegeInvest, the division of the Colorado Department of Higher Education responsible for the state's college savings plan, announced recently.

Citigroup Asset Management, the former provider of both direct and advisor-sold plans for the state, will now just provide an advisor-sold option.

According to March data from CollegeInvest, the direct-sold portion of the state's 529 plan totaled $205 million, a far cry from the $1.23 billion in advisor-sold assets. Colorado's total 529 plan assets were $1.45 billion at the end of March.

Investors who opened accounts directly through CollegeInvest will see their investments shifted from Citigroup corresponding Vanguard plans based on investment objective and other criteria. Investors can change their allocations only once a year, officials stated in a Q&A about the plan. Accounts opened through Citigroup will remain with the company.

Pieces of the Pie
Colorado's 529 Plan Statistics (3/31/04) Assets ($mil) Accounts
Total $1,435 196,712
In-state $324 34,272
Out-of-state $1,112 162,440
Direct-sold $205 23,049
In-state $181 18,932
Out-of-state $24 4,117
Intermediary-sold $1,230 166,940
In-state $142 13,968
Out-of-state $1,088 152,972
Source: CollegeInvest website
Notes: There is a discrepancy between total direct and intermediary-sold accounts and total accounts.
Under the new agreements, CollegeInvest will offer three plans: a direct-sold plan by the Travelers Group Insurance Company, a direct-sold plan by Vanguard and Upromise, and an advisor-sold plan by Citigroup Asset Management.

Upromise is a rewards company that allows investors to contribute money back from purchases on credit and grocery cards to college savings plans.

CollegeInvest officials expect to announce the investment lineup for the Vanguard plan in September. Expected options include age-based options and portfolios based on Vanguard index funds.

Citigroup will also add additional options to its 7-option plan in the fall. Citigroup's current options include: age-based, years to enrollment, all equity, 80 percent equity, balanced 50/50, fixed income 80% option, and all fixed income.

No changes will be made to the Stable Value plan offered by Travelers.

Officials said the expense ratio for the Citigroup plan would be 1.09 percent and 0.75 percent for the Vanguard plan. 

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