Data & Research April 16, 2008

Morningstar Finds Improvement in 529 Plans

Morningstar’s fifth annual best and worst 529 college savings plan study found improvements in plan investment lineups and fees.
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“We’ve witnessed noteworthy improvements in 529 college savings plans over the past few years,’ said Marta Norton, Morningstar mutual fund analyst and author of the study, in a press release. “Overall, costs have come down, many of the poorer plans have improved their fund lineups considerably, and some ineffective plan administrators have exited the 529 plan management business entirely.’

The press release said Illinois’ Bright Start College Savings Program is a major turnaround story in the study. Hiring OppenheimerFunds, Inc. as the plan’s administrator lowered fees and provided more diverse investment options. Maryland College Investment Plan, again on the best list, features high-quality funds, customization, and low fees.

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Morningstar said two of its favorite plans are Virginia’s Education Savings Trust and College America plans, which both boast low fees and diversification. Colorado’s Scholars Choice offers investors reasonable expenses and exposure to top investment managers.

New names on the worst list include:

  • Putnam CollegeAdvantage, Ohio’s broker-sold plan, for poor fund performance and high manager turnover,
  • Mississippi TIAA-CREF Affordable College Savings Program and Mississippi TIAA-CREF Affordable College Savings Advisor Program, for high fees and limited investment choices or asset class exposure, and
  • New York’s 529 College Savings Program, for lack of diversification – specifically no international exposure, which means missed gains in foreign markets and no protection in a U.S. market downturn.

For the complete 529 plan study and additional resources, visit http://www.morningstar.com/goto/Best529Plans.

Data & Research April 15, 2008

Panel Releases Best Practices for Hedge Fund Investors and Asset Mgrs.

Two blue-ribbon private-sector committees have released lists of best practices for hedge fund investors and asset managers, according to a government news release.
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The best practices for the asset managers call on hedge funds to adopt objectives in all aspects of their business, including the “critical” areas of disclosure, valuation of assets, risk management, business operations, compliance, and conflicts of interest, the news release said.

The best practices for investors include a Fiduciary’s Guide and an Investor’s Guide. The Fiduciary’s Guide provides recommendations to individuals charged with evaluating the appropriateness of hedge funds as a component of an investment portfolio while the Investor’s Guide provides recommendations to those charged with executing and administering a hedge fund program once a hedge fund has been added to the investment portfolio.

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“As we said when announcing these committees – we want the world’s highest investor protection standards; we want to guard against systemic risk and keep the United States the most competitive financial marketplace in the world. As these committees were formed, their Chairmen and the President’s Working Group (PWG) believed that markets benefit when experienced and respected participants develop best practices and new accountability standards,” said Treasury Secretary Henry M. Paulson, Jr., who chairs the PWG, in the release.

The recommendations will be open for public comment for 60 days. The committees then will review and, as necessary, revise the best practices and standards. Comments may be submitted at the Committees’ Web site.

The committees will continue to meet to discuss raising the standards for industry participants after the best practices are complete, the agency announced.

More information about the best practices release is available at http://www.treasury.gov/press/releases/hp927.htm
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