Morningstar to Launch First 529 College Savings Plan Indexes

Oct 15, 2013, 14:57 ET from Morningstar, Inc.

CHICAGO, Oct. 15, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, plans to launch a family of 529 college savings plan indexes later this year. Designed to benchmark state-sponsored 529 college savings plans, the Morningstar 529 Indexes are expected to be the first of their kind in the market.

"There is significant variation in age-based asset allocation from one 529 track to another with the same stated goal," Sanjay Arya, head of Morningstar Indexes, said. "While this diversity is good for investors, because they have different tolerance and capacity for risk, it makes benchmarking more difficult. That's why we are excited to introduce this family of 529 indexes to provide investors and advisors with another tool to help them compare and evaluate these investments to find the best fit."

The Morningstar 529 Index series will consist of three risk tracks or glide paths—conservative, moderate, and aggressive—and each of the three glide paths will have seven distinct age-based indexes for a total of 21 new indexes. The indexes will adjust asset allocation over time by reducing equity exposure and shifting toward traditional income-producing and inflation-hedging asset classes as the student nears collage age. All of the indexes will be based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company and a leader in the field of asset allocation theory. The conservative-to-aggressive glide paths will rely on Ibbotson's latest academic research on Modern Portfolio Theory, the application of liability-driven investing techniques, and advanced optimization.

Named after Section 529 of the Internal Revenue Code, 529 plans are tax-advantaged investment plans designed to encourage saving for college. Morningstar will use its comprehensive family of global proprietary indexes to build the 529 indexes using a transparent, rules-based methodology and a focus on investability.

Introduced in 2002, the Morningstar Indexes include a broad range of traditional beta global equity, fixed income, and commodity indexes that are also combined to form an asset allocation index series. Morningstar Indexes also offers a series of active equity indexes that draw on the equity, fund, and asset allocation research across the company. Currently, 35 exchange-traded products track Morningstar Indexes globally. For more information about all of Morningstar's indexes, visit Morningstar Indexes is part of the Morningstar Investment Management division.

About Morningstar, Inc. and Ibbotson Associates, Inc. Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 10 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries. The company has operations in 27 countries.

Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. It is part of the Morningstar Investment Management group, which creates custom investment solutions that combine award-winning research and global resources with proprietary Morningstar data. With approximately $166 billion* in assets under advisement and management, the Morningstar Investment Management group provides comprehensive retirement, investment advisory, and portfolio management services for financial institutions, plan sponsors, and advisors around the world.

*Data as of June 30, 2013. Includes Morningstar Associates, Ibbotson Associates, Morningstar Investment Services, OBSR Advisory Services, and Ibbotson Australia.

©2013 Morningstar, Inc.  All rights reserved. MORN-C

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SOURCE Morningstar, Inc.