Investment Options

Building a Section 529 account that is right for you takes planning. The Minnesota College Savings Plan offers you a choice of eleven investment options. These options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs.

For more information on the risks involved in investing in such investment options, and the type of investor for whom each investment option may be appropriate, read the Disclosure Booklet (PDF).

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Investment Options


Managed Allocation Option

(Risk level shifts from Aggressive to Conservative)

Investment Objective.  The Managed Allocation Option seeks to match the investment objective and level of risk to the investment horizon by taking into account the Beneficiary’s current age and the number of years before the Beneficiary turns 18 and is expected to enter an Eligible Educational Institution.

Investment Strategy.  Depending on the Beneficiary’s age, contributions to this Investment Option will be placed in one of nine age bands, each of which has a different investment objective and investment strategy. The age bands for younger Beneficiaries seek a favorable long-term return by investing primarily in mutual funds that primarily invest in equity securities (including real estate securities), which may have greater potential for returns than debt securities, but which also have greater risk than debt securities. As a Beneficiary nears college age, the age bands invest less in mutual funds that invest primarily in equity securities (including real estate securities) and invest more heavily in mutual funds that invest primarily in debt securities and in a funding agreement to preserve capital. Click here to view the underlying mutual funds in this Investment Option.

Managed Age 0-4 Managed Age 5-8 Managed Age 9-10
 
Managed Age 11-12 Managed Age 13-14 Managed Age 15
 
Managed Age 16 Managed Age 17 Managed Age 18 and over

Aggressive Allocation Option

Aggressive Allocation Option

(Risk level – Aggressive)

Investment Objective. This Investment Option seeks a favorable long-term return by investing in mutual funds that invest primarily in equity securities and, to a lesser extent, in mutual funds that primarily invest in debt securities.

Investment Strategy. To a larger degree, this Option invests in four mutual funds that invest primarily in equity securities. Click here to view the underlying mutual funds in this Investment Option. Through these mutual funds, this Option intends to indirectly allocate a certain percentage of its assets to:

  • domestic equity securities across all capitalization ranges;
  • equity securities of foreign issuers, including issuers located in developed countries and issuers located in emerging markets countries; and
  • equity securities of issuers that are principally engaged in or related to the real estate industry, including those that own significant real estate assets, such as real estate investment trusts (REITs).

Also, to a less degree, this Option invests in a number of mutual funds that invest primarily in fixed income or other types of debt securities. Through these mutual funds, this Option indirectly allocates a certain percentage of its assets to:

  • a wide spectrum of public, investment-grade, taxable debt securities denominated in U.S. dollars including government securities, as well as mortgage-backed, commercial mortgage-backed and asset-backed securities;
  • debt securities, the principal value of which increases and decreases based on changes in the Consumer Price Index for All Urban Consumers over the life of the security (typically U.S. Treasury Inflation-Linked Securities, but also including inflation-linked bonds that are issued or guaranteed by U.S. and non-U.S. public or private sector entities); and
  • high-yield securities (commonly called junk bonds) issued by both domestic and foreign companies.

 


Moderate Allocation Option

Moderate Allocation Option

Formerly named Balanced Option

(Risk level – Moderate)

Investment Objective. This Investment Option seeks moderate growth by investing in a mix of mutual funds that invest in a diversified mix of asset classes.

Investment Strategy. To a larger degree, this Option invests in four mutual funds that invest primarily in equity securities. Click here to view the underlying mutual funds in this Investment Option. Through these mutual funds, this Option intends to indirectly allocate a certain percentage of its assets to:

  • domestic equity securities across all capitalization ranges;
  • equity securities of foreign issuers, including issuers located in developed countries and issuers located in emerging markets countries; and
  • equity securities of issuers that are principally engaged in or related to the real estate industry, including those that own significant real estate assets, such as real estate investment trusts (REITs).

Also, to a moderate degree, this Option invests in a number of mutual funds that invest primarily in fixed income or other types of debt securities.  Through these mutual funds, this Option indirectly allocates a certain percentage of its assets to:

  • a wide spectrum of public, investment-grade, taxable debt securities denominated in U.S. dollars including government securities, as well as mortgage-backed, commercial mortgage-backed and asset-backed securities;
  • debt securities, the principal value of which increases and decreases based on changes in the Consumer Price Index for All Urban Consumers over the life of the security (typically U.S. Treasury Inflation-Linked Securities, but also including inflation-linked bonds that are issued or guaranteed by U.S. and non-U.S. public or private sector entities); and
  • high-yield securities (commonly called junk bonds) issued by both domestic and foreign companies.

Conservative Allocation Option

Conservative Allocation Option

(Risk level – Conservative)

Investment Objective. This Investment Option seeks a conservative to moderate total return by investing in a funding agreement and mutual funds that invest primarily in debt securities and, to a lesser extent, by investing in mutual funds that invest primarily in equity securities.

Investment Strategy. To a less degree, this Option invests in four mutual funds that invest primarily in equity securities. Click here to view the underlying mutual funds in this Investment Option. Through these mutual funds this Option intends to indirectly allocate a certain percentage of its assets to:

  • domestic equity securities across all capitalization ranges;
  • equity securities of foreign issuers, including issuers located in developed countries and issuers located in emerging markets countries; and
  • equity securities of issuers that are principally engaged in or related to the real estate industry, including those that own significant real estate assets, such as real estate investment trusts (REITs).

Also, to a larger degree, this Option invests in a number of mutual funds that invest primarily in fixed income or other types of debt securities. Through these mutual funds, this Option indirectly allocates a certain percentage of its assets to:

  • a wide spectrum of public, investment-grade, taxable debt securities denominated in U.S. dollars including government securities, as well as mortgage-backed, commercial mortgage-backed and asset-backed securities;
  • debt securities, the principal value of which increases and decreases based on changes in the Consumer Price Index for All Urban Consumers over the life of the security (typically U.S. Treasury Inflation-Linked Securities, but also including inflation-linked bonds that are issued or guaranteed by U.S. and non-U.S. public or private sector entities); and
  • high-yield securities (commonly called junk bonds) issued by both domestic and foreign companies.

In addition, this Option also invests in a funding agreement.


International Equity Index Option

International Equity Index Option

(Risk level – Aggressive)

Investment Objective. This Investment Option seeks to provide a favorable long-term total return, mainly through capital appreciation.

Investment Strategy. Each of the mutual funds in which this Investment Option invests is considered an “index fund,” meaning the mutual fund attempts to track a benchmark index. Click here to view the underlying mutual funds in this Investment Option.


U.S. and International Equity Option

U.S. and International Equity Option

Formerly named 100% Equity Option

(Risk level – Aggressive)

Investment Objective. This Investment Option seeks to provide a favorable long-term total return, mainly from capital appreciation.

Investment Strategy. This Investment Option invests 100% of its assets in mutual funds that invest primarily in equity securities. Click here to view the underlying mutual funds in this Investment Option.


U.S. Large Cap Equity Option

U.S. Large Cap Equity Option

(Risk level – Aggressive)

Investment Objective. This Investment Option seeks to provide a favorable long-term total return, mainly from capital appreciation.

Investment Strategy. This Investment Option invests 100% of its assets in an “index fund,” meaning that the mutual fund attempts to track a benchmark index. The mutual fund in which this Invesetment Option is invested is: TIAA-CREF S&P 500 Index Fund.


Equity and Interest Accumulation Option

Equity and Interest Accumulation Option

(Risk level – Moderate)

Investment Objective. This Investment Option seeks to provide a moderate long-term total return.

Investment Strategy. This Investment Option invests half of its assets in an equity index mutual fund and the other half of its assets in a funding agreement. Click here to view the underlying mutual funds in this Investment Option.


100% Fixed-Income Option

100% Fixed Income Option

(Risk level – Moderate)

Investment Objective. This Investment Option seeks to provide a moderate long-term rate of return primarily through current income.

Investment Strategy. This Investment Option invests 100% of its assets in mutual funds that invest primarily in debt securities. The majority of the Investment Option is invested in an “index fund” which means that the mutual fund attempts to track a benchmark index. Click here to view the underlying mutual funds in this Investment Option.


Money Market Option

Money Market Option

(Risk level – Conservative)

Investment Objective. This Investment Option seeks to provide current income consistent with preservation of capital.

Investment Strategy. This Investment Option invests 100% of its assets in a money market mutual fund. The mutual fund in which this Investment Option is invested is: TIAA-CREF Money Market Fund.


Principal Plus Interest Option

(Risk level – Conservative)

Investment Objective. This Investment Option seeks to preserve capital and provide a stable return.

Investment Strategy. The assets in this Investment Option are allocated to a funding agreement issued by TIAA-CREF Life, which is an affiliate of TFI, to the Board as the policyholder on behalf of the Plan. The funding agreement provides a minimum guaranteed rate of return on the amounts allocated to it by the Investment Option. The minimum effective annual interest rate will be neither less than 1% nor greater than 3% at any time. The guarantee is made by the insurance company to the policyholder, not to Account Owners. In addition to the guaranteed rate of interest to the policyholder, the funding agreement allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The rate of any additional interest is declared in advance for a period of up to 12 months and is not guaranteed for any future periods. The funding agreement in which this Investment Option is invested is: TIAA-CREF Life Funding Agreement.

Transfers from the Principal Plus Interest Option to the Money Market Option are not permitted. If this restriction changes, you will be notified prior to the effective date of any such change.

Effective April 1, 2014, contributions received, and accumulations arising from such contributions, under the Funding Agreement for the Guaranteed Option as of March 31, 2014 will be credited to the Minnesota State Board of Investment (on behalf of the Minnesota Office of Higher Education) with an effective annual interest rate of 1.20% and are guaranteed to earn this rate through March 31, 2015, subject to the claims paying ability of TIAA-CREF Life.



Reflects current allocations for all investment options. Allocations are reviewed and adjusted periodicially.

Account values are not guaranteed and will fluctuate with market conditions. For a complete discussion of risks associate with each investment option, please refer to the Disclosure Booklet.

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