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AR iShares 529 Plan |
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State Provider: Arkansas; Net Assets ($mil):
$14.8 as of
09-30-09 |
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The Arkansas iShares 529 plan is unique, but costs limit this newcomer's appeal. As its name suggests, this broker-sold plan relies exclusively on passively managed iShares ETFs--a first in the 529 college savings universe. The plan's age-based and static options give investors broad exposure to the equity and fixed income markets, and even some less common areas such as Treasury inflation protected securities and real estate investment trusts (REITs). We like the diversification that ETFs provide, but we take issue with the plan's fees. Expenses are reasonable when compared with the rest of the broker-sold college savings universe, but we think they should be even lower, especially considering the low-cost index strategy of the underlying ETFs. For example, the plan's 0.40% program management and state administration fee is in many cases double the cost of the underlying ETF. This additional layer of fees erodes one of the most appealing characteristics of a passive investment strategy. That said, this plan is a decent option for in-state investors because Arkansas residents can deduct up to $5,000 in contributions from annual state income taxes (married couples filing jointly can deduct up to $10,000.). However, non-Arkansas residents can access similar index strategies for a lower cost elsewhere. We suggest taking a look around.(Information as of 04/13/2009) |
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| Availability: Sales Channel |
Resident: Both
Non-Resident: Both
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| Annual State Tax Deduction |
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Up to $5,000 (S),
10,000 (J)
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| Max Investment/Beneficiary |
| Mos. to Qualified Withdrawal |
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Age-Based Portfolios
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| Static Portfolios and Self-Directed Funds |
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| US Stock
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Bond |
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| Total International Funds: 0 |
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| Underlying Funds’ Ratings |
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| Overall Morningstar Rating |
# Equity
Funds |
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# Bond
Funds |
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| Ratings as of
10-31-09 |
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| Range |
0.4 |
| 529 Plan Avg |
0.8 |
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| Portfolio Expense Ratio Range |
| Fee to Change Beneficiary |
| Share Classes: Sales Charge |
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| Initial Purchase |
$500 |
$500 |
| Additional Purchase |
50 |
50 |
| Initial (AIP) |
50 |
50 |
| Additional (AIP) |
50 |
50 |
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