Morningstar Advisor - February/March 2009 - 78

©2009 Morningstar. All rights reserved. The Morningstar name and logo are registered trademarks of Morningstar, Inc. Morningstar Advisor Fall 2008 Taxes Financials Managers American Funds MorningstarAdvisor.com The magazine of investing insights for independent-minded advisors Summer 2008 Spotlight Spotlight Summer 2008 A 529 Travel A 529 Travel Guide Guide Where to goto go to the the Where to ﬁnd ﬁnd best best plans, and plans, and the states where you’ll the states where you’ll ﬁnd the worst. ﬁnd the worst. Best Best Year plan was on best list best list Year plan was on Year plan was on worst list worst list Year plan was on Alaska T.Alaska Price College Savings Plan† Plan† Rowe T. Rowe Price College Savings ColoradoColorado Scholars Choice College Scholars Choice College Savings Program* Savings Program* Illinois Bright Start College Savings Program Program Illinois Bright Start College Savings Kansas Learning Learning Quest Advisor* Kansas Quest Advisor* Maryland College Investment Plan† Plan† Maryland College Investment MichiganMichigan Education Program Program Education Savings Savings Nebraska College Savings Savings Nebraska College Nevada VanguardVanguard 529Savings Plan* Plan* Nevada 529 College College Savings South Dakota College Access 529 South Dakota College Access 529 Utah Educational Savings Savings Utah Educational Virginia CollegeAmerica* a Virginia CollegeAmerica* a Virginia Education Savings Trust b Trust b Virginia Education Savings Worst Worst Features 2004 2006 2006 2005 2004 2006 2005 2004 2007 2004 2004 2007 2006 2005 2004 2007 2006 2005 2004 2008 2007 2006 2005 2006 2008 2007 2005 2006 2005 2007 2008 2006 2007 2006 2005 2008 2007 2006 2007 2007 2008 2008 2006 2004 2005 2005 2004 2005 2004 2008 2008 2005 AlabamaAlabama Higher Education 529 Higher Education 529 Alaska John Freedom 529* Every year since 2004, Morningstar’s analysts analysts Alaska John Hancock Hancock Freedom 529* Every year since 2004, Morningstar’s Arizona & Reed & Reed Plan* have chosen the best and best and worst 529 plans. Arizona Waddell WaddellInvestEd InvestEd Plan* have chosen the worst 529 plans. Iowa Advisor 529 Twelve different different plans have landed on a best Iowa Advisor 529 Plan* Plan* Twelve plans have landed on a best Education Savings Savings Plan lists, andlists, and they’re still deserving of investors’ KentuckyKentucky Education Plan Trust† Trust† they’re still deserving of investors’ Mississippi Adv Affordable money. One plan, Virginia CollegeAmerica, has money. One plan, Virginia CollegeAmerica, hasMississippi Adv Affordable College College Savings Program* a Savings Program* a made themade the list each year. Twenty-one plans list each year. Twenty-one plans Mississippi Affordable have made themade the worst lists,of which of which noMississippi Affordable College College have worst lists, several several no Savings Program† b Savings Program† b longer exist. Wyoming College Achievement longer exist. Wyoming College Achievement Nebraska AIM College Savings merged with Colorado’s offeringsofferings and merged with Colorado’s in 2006, in 2006, and Nebraska AIM College Savings Plan* Plan* New College College Savings Program† Tennessee BEST Savings Plan closed inclosed in May. New York 529 York 529Savings Program† Tennessee BEST Savings Plan May. North Carolina College Early thisEarly this year, Westclosed Corner- Corner- North Carolina National National College year, West Virginia Virginia closed Savings Program† Savings Program† stone SMART529 and Leaders SMART529 and stone SMART529 and Leaders SMART529 and Ohio Putnam CollegeAdvantage* Ohio Putnam CollegeAdvantage* merged the assets into the better Hartford Hartford merged the assets into the better Wisconsin EdVest College SMART529. A few other “worst” offeringsofferings Wisconsin EdVest College Savings Savings SMART529. A few other “worst” have improvedimproved since we cited them. Maine’s have since we cited them. Maine’s plan made themade the 2005 worsttoday, the plan 2005 worst list, but list, but today, the Maine College College Plan NextGen NextGenInvestingInvesting Plan’s broker- and Maine NextGen NextGenInvestingInvesting Plan College College Plan’s broker- and Missouri Missouri MOST 529 Advisor* MOST 529 Advisor* direct-sold plans areplans are solidfor both residirect-sold solid choices choices for both resiNorth Dakota College dents and nonresidents. Another 2005 worst, worst, North Dakota College SAVE SAVE dents and nonresidents. Another 2005 North Dakota’s Dakota’sSAVE Plan, changed changed North College College SAVE Plan, Closed/Defunct Closed/Defunct for the better when it dropped its Morgan Morgan for the better when it dropped its Arizona PF 529 aPF 529 a Arizona Stanley lineup for stellar VanguardVanguard index funds. Stanley lineup for stellar index funds. Arizona SM&R Missouri’s MOST 529 Advisor Plan has Plan has added Arizona SM&R Family b Family b Missouri’s MOST 529 Advisor added Tennessee BEST Savings Plan better funds and cut its expensesexpenses to a more Tennessee BEST Savings Plan better funds and cut its to a more West Virginia Cornerstone SMART529 a reasonable level since it made themade the worst list inWest Virginia Cornerstone SMART529 a reasonable level since it worst list in West Virginia Leaders SMART529 b 2007. This mapThis map tracks every plan listed since West Virginia Leaders SMART529 b 2007. tracks every plan listed since Wyoming College Achievement 2004. Keep it handy to handy to locate thebest 2004. Keep it locate the nation’s nation’s best Wyoming College Achievement and worst 529 plans. plans. and worst 529 Improving Improving 2008 2004 2008 2004 2008 a 2007 ba 2007 2007 b 2007 2007 a 2008 2007 2006 2006 2006 2005 2004 2008 2007 ba 2008 2008 2007 2006 2005 2004 b 2008 2008 2005 2004 a 2006 2005 2005 2004 ba 2006 2006 2005 2005 2004 b 2006 2005 2004 a 2008 ba 2008 2008 2005 2005 Spotlight: College Savings 32 Work Your Way Through College Planning The number of hurdles grows to reach such a simple goal: ﬁnancing a college education. 36 Sizing Up the Options We inspect the more popular college-savings vehicles and tally their pluses and minuses. 38 Best and Worst 529 CollegeSavings Plans Across the nation, many states clean up their messes, while others continue to offer bad plans. 42 A 529 Travel Guide Where to go to ﬁnd the best plans, and the states where you’ll ﬁnd the worst. 45 10 Tax-Smart Tips for College-Savings Planning Section 529 savings accounts need to be handled with care; otherwise, their tax beneﬁts could turn into tax nightmares. Morningstar Conversation 50 Global Dialogue With proﬁts falling and uncertainty spreading, T. Rowe Price manager Rob Gensler discusses his approach to investing in the world’s diverse markets. Undiscovered Managers 58 How Sequoia Cranks Out Good Returns Year after Year If you’re harboring doubts about Sequoia Fund’s reopening, cast them aside. It’s still a good mutual fund. 61 The Many Layers of David Winters A successful entrepreneur and world-class investor, Winters achieved both by taking an eclectic approach. 2007 2006 2005 b 2008 2007 2006 2005 2006 2005 2004 2006 2005 2004 The College Savings Landscape: Choices are plentiful, as are the challenges. *Broker sold only sold only *Broker †Direct sold†Direct sold only only All other plans are available through both channels. channels. All other plans are available through both 42 Morningstar Advisor Summer 2008 42 Morningstar Advisor Summer 2008 MorningstarAdvisor.com 43 MorningstarAdvisor.com 43 Gray Matters Gray Matters Morningstar Conversation Another Block in Building a Portfolio Another Block in Building a Portfolio By Tom Idzorek Idzorek By Tom It’s now possible to proveproveprivate equity has ahas a place in a It’s now possible to that that private equity place in a diversiﬁed collection of assets. diversiﬁed collection of assets. New research from Ibbotson Associates New research from Ibbotson Associatesstudied—private equity improved the risk/ the risk/ A new waynewgaining access to the private private studied—private equity improved A of way of gaining access to the is shining shining lightrolethe role equity equityreturn characteristics of a model a model asset is light on the on private private return characteristics of asset equity asset class is emerging, however.however. It is equity asset class is emerging, It is should play in portfolios. should play in portfolios. allocation. allocation. accessible by all investors, it is easyitto easy to accessible by all investors, is maintainmaintain strategicstrategic asset allocation, a target a target asset allocation, The extraordinary performance of leading asset asset ourUntil our study, of private equity inequity in a and it resultsitin a mark-to-market time series series The extraordinary performance of leading Until study, the role the role of private a and results in a mark-to-market time allocators, like the Yale the Yale Endowment, coupledwell-diversiﬁed portfolioportfolio beennot been clearly does notdoes not suffer from return smoothing. The allocators, like Endowment, coupled well-diversiﬁed had not had clearly that that suffer from return smoothing. The with a lower perceived risk premiumpremium for with a lower perceived risk for understood. While deﬁning deﬁning theequity equityequities equities of traded ﬁrms whose whose understood. While the private private of publicly publicly traded ﬁrms traditional equities,equities, has considerable traditional has created created considerableasset class was straightforward, there wasn’t awasn’t a asset class was straightforward, there businesses are similar to those to those of traditional businesses are similar of traditional interest in alternative asset classes. classes. Over thewidely-agreed-upon time series ofseries of data interest in alternative asset Over the widely-agreed-upon time data private equity ﬁrms areﬁrms are being bundled together, private equity being bundled together, past
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Morningstar Advisor - February/March 2009

Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2009
