Changes Coming to Age-Based, Socially Targeted Portfolios in 2020
Effective January 1, 2020, Virginia529 has made a number of changes to its roster of investment options.
Virginia529 is re-categorizing its age-based evolving portfolios as “target enrollment” portfolios to better reflect the year a beneficiary will begin using the funds for higher education. The targeted enrollment year is identified in the name of the fund and investors can choose an age-based portfolio that closely approximates the year when they believe funds will start to be drawn.
If, for instance, your child is entering kindergarten in the fall, you may consider picking the fund with 2033 portfolio since that signifies the year they would graduate from high school. This is a name change only and does not reflect a change to the portfolio’s underlying investment strategy. Related: Three Things to Know About Target Enrollment Portfolios.
Virginia529 is changing the name of its Socially Targeted Portfolio to the “ESG Core Equity Portfolio” to more accurately reflect the underlying investment strategy of the portfolio, which takes into consideration the environmental, social and governance practices of the companies in which the portfolio chooses to invest.
Both are name changes only, and do not reflect a change to the underlying strategy. Related: Socially Targeted Portfolio Performance.
As of January 1, Virginia529 will offer a 2039 Portfolio within its Invest529 Target Enrollment roster. The 2039 Portfolio will be the suggested portfolio for beneficiaries between the ages of 0-3. This aggressive equity portfolio’s strategy is based on the understanding that the volatility associated with equity markets can be accompanied by the greatest potential for long-term capital appreciation. This portfolio will initially have the same allocations as Portfolio 2036, although its allocations will begin to shift and become more conservative three years later than Portfolio 2036.
Invest529 account owners can take advantage of this new portfolio by opening an additional account or changing an existing investment to this new portfolio. Account owners are limited to only two investment direction changes per calendar year.
Virginia529 will transition the 2015 Portfolio (100% stable value since January 1, 2017) to the 100% stable value investment portfolio currently named Stable Value, per the Invest529 Program Description. Consolidation of the 2015 Portfolio and Stable Value portfolios reduces expenses associated with maintaining multiple portfolios invested in the same stable value investment vehicle, keeping Invest529 administrative fees low.
Invest529’s target enrollment portfolios help investors manage their higher education investment by automatically becoming more capital preservation-oriented over time. This process occurs annually, with the next evolution on January 1, 2020.
If you are saving in a target enrollment portfolio, you do not need to take any action for the evolution, but will notice differences online or on your statements after January 1, 2020. This is not considered an investment change and therefore is not subject to the twice-yearly IRS limit.
All transitions are scheduled to occur on or about December 31, 2019 and will be reflected on account owners’ year-end statements. The changes may be viewed online at Virginia529.com after January 1, 2020.
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