Fidelity Investments last week announced that it is cutting the management fees on its Section 529 plans. The reduced rates will apply to Fidelity's seven state-sponsored 529 plans.
The mutual fund giant plans to lower its fees anywhere from one-third to one-half across all its direct- and adviser-sold plans. The rate changes affect the fees that Fidelity and the states charge to manage the plans. They do not apply to the underlying funds.
For direct-sold plans, Fidelity will cut program management fees in half, or 15 basis points, for its index portfolios. It will lower fees by one-third (10 basis points) across the plans' active portfolios.
The rate changes for direct-sold 529 plans apply to college savings products in New Hampshire (Unique College Investing Plan), California (ScholarShare College Savings Plan), Massachusetts (U.Fund College Investing Plan), Delaware (Delaware College Investment Plan) and Arizona (Fidelity Arizona College Savings Plan).
With the new rate scale, total index portfolio fees now range from 0.25% to 0.35% of plan assets, Fidelity said. Total fees for actively managed portfolios run from 0.59% to 1.04% of plan assets.
For adviser-sold plans (New Hampshire's Fidelity Advisor 529 Plan and California's ScholarShare Advisor College Savings Plan), Fidelity has cut the program fee by one-third. Thus, total fees now range from 0.84% to 1.48 % of plan assets.
A number of states, including Colorado, have reduced 529 fees in recent months,
Fidelity also announced that, over the next year, it will be adding funds to its age-based portfolios. The firm will add two funds, Fidelity Emerging Markets and Fidelity Advisor Emerging Markets, to its direct- and adviser-sold plans' age-based portfolios.
The 529 plans that Fidelity manages will also be upping their international equity exposure — currently from zero to 20% — to 30% of the overall equity allocation.
E-mail John Goff at [email protected].
