Asset Allocations in 529 Plans Show Wide Disparities

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In a recent study of age-based investment options in 529 college-savings plans, found sizable differences among the plans in their investment allocations for older beneficiaries (ages 17+), with some plans retaining a significant exposure to the stock market.

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The disparities in glide paths can produce significant differences in returns among 529 plans, even for children of the same age.

A recently-updated study conducted by reveals significant variations in the asset-allocation approach underlying the so-called “age-based” investment options in Section 529 college savings plans. An age-based investment option — offered by most states — automatically shifts from stock-weighted portfolios to income-weighted portfolios as a child approaches college age.’s study shows that while many 529 plans have shifted entirely to short-term bonds and money market funds for beneficiaries in college or close to college, others maintain a significant investment in stocks and longer-term bonds even for beneficiaries of college age. An increasing number of 529 plans offer multiple tracks, permitting investors to select the level of risk they feel is most appropriate.

“Our study focuses on account beneficiaries ages 17 and older,” says Joe Hurley, founder and CEO of JFH Innovative LLC, which owns “That’s the age of particular concern because parents will soon need to begin withdrawing from their accounts to pay for college expenses.”

The “glide path” utilized by a 529 plan in an age-based option is designed to protect the investments for older children, while allowing parents of younger children to capture greater returns over time by maintaining a higher concentration in stocks. But the disparities in glide paths can produce significant differences in returns among 529 plans, even for children of the same age. Accounts that retain a significant exposure to stocks, or longer-term bonds, can be adversely affected by market volatility.

“That's not to say, however, that age-based options with less exposure in the stock market are always preferable,” says Hurley. “Since many 529 accounts will be withdrawn over a period of four or more years, plans that maintain some exposure to stocks can be expected to perform better over the duration of the student’s college career, although with some additional risk.”

In any event, investors in 529 plans should be aware of the glide path employed by their plan manager and make sure they are comfortable with the levels of risk in their age-based accounts.


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Marie Osypian
JFH Innovative LLC
(585) 286 - 5426
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