State Investment Commission Votes to Replace Underperforming Funds
PROVIDENCE, RI - General Treasurer Gina M. Raimondo today announced additional enhancements to Rhode Island's CollegeBoundfund, the state's 529 plan. The State Investment Commission (SIC) voted today to replace under-performing funds within the age-based tracks in the CollegeBoundfund. While Morningstar rating agency acknowledges the SIC is taking positive steps to improve the program, it has again given the plan a negative rating.
"While we are happy to receive positive comments on our pending plan improvements, there is still work to do to make this program as strong as possible for Rhode Island families saving for college," Raimondo said. "We are taking decisive action to create a stronger investment line-up to better support people saving for college."
This year the SIC had Pension Consulting Alliance (PCA) conduct an independent analysis of the program. Key findings include:
• The program offers a good variety of investment options
• From an asset allocation standpoint, the program is positioned well vs. other similar 529 plans
• Performance of certain underlying funds has lagged the market and needs to be addressed
Acting on the suggestions of PCA, at the last SIC the following actions were approved:
• Replacing a number of individual, underperforming funds
• Creating a new, low-fee passively managed age-based glide path; for Rhode Island residents, this option will be the lowest-cost currently available
Treasury has had, and will continue to have, Alliance Bernstein appear before the SIC to closely monitor their investment performance and to ensure that we offer Rhode Island residents ample, diversified, low-cost investment options.
In July 2010, the prior administration entered into a five-year contract with AllianceBernstein, the Collegeboudfund's investment manager. The contract expires on June 30, 2015. The decision whether or not to renew the contract will be made in advance of that date.