Exchange traded funds are joining mutual funds as holdings within 529 college savings plans. A majority of the growth has been based upon the interest of financial advisors.
“Advisers like them because ETFs give them very specialized investment options,” Andrea Feirstein of AKF Consulting said in a recent report. “And ETFs tend to be lower cost. So an adviser who puts an ETF into a client’s account is lowering the investment expense, which should give them better performance (than a mutual fund that invests the same way).” [What is an ETF? – Part 19: 529 Savings Plans]
According to AKF Consulting, there are currently 92 529 savings plans spread out over 50 states in the U.S. and District of Columbia. Of those, 15 offer ETFs, up from the 10 that offered them back in February 2012, reports Paul Katzeff for Investor’s Business Daily. [ETFs Gaining Traction with 529 Plan Providers]
The main driver of offering ETFs in 529 plans is financial advisors and about 31 current plans are sold through them.