Morningstar Advisor - December/January 2012 - (Page 22)

Investment Briefs Morningstar Names Best 529 College-Savings Plans Morningstar’s annual study of 529 plans found that several plans have trimmed their expense ratios in recent months, with the industry’s average asset-weighted expense ratio dropping to 0.87% from 0.94% over a 10-month period through August. That decline represents a significant price cut in plans from states such as Georgia, Nebraska, and Oklahoma. As the industry has improved, none of the 529 plans that Morningstar reviewed warranted an Analyst Rating of Bottom, leaving 58 plans rated Top, Above Average, Average, and Below Average. Six plans earned Top ratings: r T. Rowe Price College Savings Plan (Alaska) r Maryland College Investment Plan r CollegeAdvantage 529 Savings Plan (Ohio) r The Vanguard 529 College Savings Plan (Nevada) r Utah Educational Savings Plan r CollegeAmerica (Virginia) Seven plans earned Below Average ratings: r Tomorrow’s Scholar College Savings Plan (Wisconsin) r The Upromise College Fund 529 Plan (Nevada) r CollegeBoundfund of Rhode Island (moved up to Below Average from Bottom) r NextGen College Investing Plan (Maine) r TD Ameritrade 529 College Savings Plan (Nebraska) r Schwab 529 College Savings Plan (Kansas) r Minnesota College Savings Plan Cerulli Says: Trend Toward Independence Continues Advisors continue to migrate to independent models, recent research by Cerulli Associates shows. The dually registered channel (composed of advisors who affiliate with an independent broker-dealer in addition to maintaining a stand-alone registered investment advisory) jumped 10.2% in 2010 from 2009. The number of both dually registerd advisors and registered investment advisors saw substantial three-year increases. Cerulli projects that this trend will continue as product-use autonomy, transition support, and the flexibility that self-employment offers all will continue to entice more advisors to go independent. Total Advisors by Channel, 2008–10 Channel 2008 2009 2010 1-Yr Annlzd Change 3-Year Annlzd Change Wirehouse Regional Broker-Dealer Bank Broker-Dealer Insurance Broker-Dealer Independent Broker-Dealer Registered Investment Advisor Dually registered (IBD and RIA) Total 54,865 34,598 16,815 96,004 98,142 19,322 12,066 331,811 50,204 38,249 15,919 95,404 98,848 20,534 11,591 330,748 50,742 34,359 14,986 89,121 97,792 20,605 12,773 320,378 1.1% –10.2% –5.9% –6.6% –1.1% 0.3% 10.2% –3.1% –3.7% 1.3% –3.2% –1.4% –0.6% 6.7% 7.2% –0.6% Analyst Note: For purposes of the 2010 sizing, Cerulli moved Bank of America from the bank channel to the wirehouse channel reflecting its integration into the Merrill Lynch advisor force. In 2009, Bank of America accounted for 1,664 advisors and $298 billion in assets under management. Sources: Securities Industry and Financial Markets Association, Investment News, Financial Planning, Bank Insurance Market Research Group, National Regulatory Services, Standard and Poor’s Money Market Directories, Meridian IQ, Cerulli Associates largest firms in the market. That’s a bargain for a minimum investment of $10,000. Vanguard Total Stock Market Index VTSAX This fund charges a basis point more, but 0.06% is still very cheap. Fidelity Spartan Extended Market Index FSEMX Vanguard Short-Term Bond Index VBIRX With yields on high-quality bonds at pathetically low levels, it makes sense to pinch pennies and buy a fund that charges 0.11%. Vanguard Small Cap Index VSMAX Vanguard significantly improved its small-cap indexing when it switched to the MSCI US Small Cap 1750 from the Russell 2000. Vanguard Mid Cap Index VIMAX This fund differs from extended-market indexes in that it just covers mid-caps rather than mid- and small caps. It charges a modest 0.12%. Seven of the Best Index Funds Russel Kinnel, Morningstar’s director of fund research, recently listed “some of the cheapest and best open-end index funds.” Vanguard 500 Index Admiral VFIAX For just 0.06%, investors get exposure to the The fund is a good option to round out a domestic portfolio that holds an S&P 500 fund. Vanguard Total Bond Market Index VBTLX This fund charges just 0.11%, which is good given how low the bond markets’ yields are. 22 Morningstar Advisor December/January 2012

Table of Contents for the Digital Edition of Morningstar Advisor - December/January 2012

Morningstar Advisor - December/January 2012
Letter From the Editor
Seduced by Complexity
Is China Exposure Important for a Portfolio?
A Niche Built on Trust
How to Find Your Client’s Investment Style
Taking the Long View
Consensus on Europe Elusive
Four Picks for the Present
Investment Briefs
Is Perception Reality for Active Managers?
Be Alert for Basic-Materials Bargains
Investment Boom Unsustainable
Digging Moats in China
Where China’s Domestic Companies Stand to Benefit
Arising Opportunities
China Strong Long Term
From Currency Manipulation to International Acceptance
The Keys to China’s Fortune
Wedgewood’s Lessons Pay Off
Reading the Evidence on Indexing
Scouting for Investments Abroad
Yield, Please (Hold the Europe)
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
China Fund Managers Eat Elsewhere

Morningstar Advisor - December/January 2012