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Most Would Be Well Served by This 529 Plan

Most Would Be Well Served by This 529 Plan

Janet Yang: When it comes to 529 plans, about half of Americans would be better off looking beyond their state's borders for a college savings plan. That could be because their state doesn't offer a state tax benefit or the state's tax benefit can carry over to any state's plan. For any of these investors, we think one of the best is the Gold-rated Invest529 plan.

This plan is managed and offered by the state of Virginia, and it's available directly to residents across the U.S. Most investors in 529 plans use age-based portfolios that automatically move from stocks to bonds over time. We like how Virginia puts together its age-based portfolio using a sensible mix of active and passive strategies.

Gold- and Silver-rated funds from Vanguard give index-based exposure to broad asset classes like U.S. large-cap equities. Meanwhile, a number of medalists, like Gold-rated American Funds EuroPacific Growth and Silver-rated Aberdeen Emerging Markets, fill out the portfolio with well-regarded actively managed strategies.

This approach has helped the portfolios deliver for investors. Over the last five and 10 years through the end of September, most of the age-based portfolios that have been around that long beat their custom benchmarks; that's a feat that most actively managed strategies have struggled to accomplish during that time.

The portfolio's competitive fees helped to make this happen. We especially like how Virginia continues to lower its fees to keep this edge. All considered, the Invest529 plan remains a top-notch choice.

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Janet Yang Rohr

Director, Multi-Asset Alternatives, Manager Research
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Janet Yang Rohr, CFA, is director of multi-asset and alternative strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for Morningstar Analyst Rating assignments for multi-asset and alternative strategies globally and oversees a team of analysts who cover these strategies. She also covers a variety of asset-allocation strategies, including target-date funds and 529 college-savings plans from John Hancock, State Street Global Advisors, BlackRock, and other asset managers.

Yang Rohr was a strategist, senior analyst, and director of Morningstar's multi-asset strategies manager research team before being appointed to her current role in 2016. Before joining Morningstar in 2010, Yang was vice president and investment product manager for multimanager funds and solutions as well as target-date funds for Northern Trust Global Investments in Chicago. She also served as a manager research analyst for Aon Investment Consulting, where she specialized in manager due diligence and the development of the practice's quantitative research process.

Yang Rohr holds a bachelor's degree in English and economics from Northwestern University and a master's degree in business administration, with concentrations in finance and entrepreneurship, from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. In 2014, Institutional Investor magazine named Yang among its Rising Stars of Mutual Funds.

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