Administration August 18, 2011

529 Plan Assets Increase in Q2 2011

August 18, 2011 (PLANSPONSOR.com) - Financial Research Corporation's (FRC) 529 College Savings Quarterly Data Highlights show 529 savings plan assets have increased to an estimated $149.8 billion as of the second quarter of 2011.  
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 This reflects a 2.4% increase from first quarter 2011 assets of $146.4 billion.  Over the last 12 months, 529 assets have increased by 27.4%. In contrast, long term mutual fund and ETF assets (including funds-of-funds) have increased by 25.9% over the past year from $7,587 billion to $9,551 billion, a press release said.  

The top 10 529 savings plans from the second quarter 2011 by assets include:  

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  • CollegeAmerica – Virginia
  • New York’s College Savings Program Direct – New York
  • CollegeBound Fund – Rhode Island
  • UNIQUE College Investing Plan – New Hampshire
  • NextGen College Investing Program Advisor – Maine
  • The Vanguard 529 Savings Plan – Nevada
  • Utah Education Savings Plan Trust (EUSP) – Utah
  • ScholarShare College Savings Plan – California
  • BlackRock CollegeAdvantage 529 Plan – Ohio
  • U.Fund College Investing Plan – Massachusetts

The second quarter data also showed the top five plan managers: 

  • American Funds 
  • Upromise Investments 
  • Fidelity 
  • TIAA-CREF 
  • Alliance Bernstein 
Administration August 18, 2011

Investors Who Maintain Diversified Asset Allocation Strategy Are Rewarded

August 18, 2011 (PLANSPONSOR.com)  - Fidelity Investments' second quarter 2011 review of 401 (k) accounts confirmed that even during the most volatile market activity, investors who maintain a diversified asset allocation strategy, and do not pull out of equities or make sudden contribution reductions, are rewarded when the equity markets rebound.  
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To understand the impact of making investment decisions based on market volatility, such as moving assets out of equities or stopping contributions, Fidelity analyzed participant actions during the market decline of 2008-2009 through the second quarter of this year. The results reinforced the value of a long-term investment approach.  

For participants who changed their equity allocations to 0% between October 1, 2008, and March 31, 2009, the lowest months of the market downturn, and maintained this allocation through June 30 of this year, the cost to their account balance was significant. These participants experienced an average increase in account balance of only 2% through June 30. Participants who dropped to 0% equity, but then returned to some level of equity allocation after that market decline, saw an average account balance increase of 25%, a sharp contrast to those who stayed with an asset allocation strategy inclusive of equities – these participants realized an average account balance increase of 50% during the same period. 

Fidelity also examined participants who stopped contributing to their 401(k) during the same market decline of 2008-2009. These participants experienced an average increase in their account balances of 26% through the end of the second quarter, compared to 64% for participants who continued making regular contributions.  

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Analysis of second quarter data reinforced how many participants understood the importance of ongoing contributions and proper asset allocation. In fact, the average annual participant 401(k) contribution was $5,790 at the end of the quarter, up 11% from the same quarter five years prior. More participants also increased their contribution rates than decreased them (6.1% vs. 2.7% respectively), a positive trend for nine consecutive quarters. Additionally, the Fidelity average 401(k) balance of $72,700 was up 19% over five years.  

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