2021 Midyear Outlook: Navigating through the recovery
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The Ivy InvestEd 529 Plan offers two types of investment options: 10 InvestEd Portfolios comprised of underlying mutual funds and 19 Individual Fund Portfolios. Account owners can select a combination of these investment options.
Each InvestEd Portfolio is a "fund of funds" investing substantially all of its assets in a number of mutual funds and ETFs, rather than directly investing in stocks, bonds and other instruments.
Age-based option: Allows investments to be allocated to an lnvestEd Portfolio based on the age of the designated beneficiary. This option is designed to transition account investments incrementally from equity-focused holdings to fixed-income holdings as the designated beneficiary ages in an effort to reduce the risk of loss as capital preservation becomes paramount as higher education payment needs near. Under the age-based option, the balance is automatically exchanged to the next InvestEd Portfolio that, in each case, reduces equity investment holdings by about 10% and increases fixed-income holdings by approximately the same amount. These exchanges are done within approximately 30 days of the designated beneficiary's 3rd, 6th, 8th, 10th, 12th, 14th, 16th, 18th and 20th birthdays. The age-based options are designed to maximize higher education investments using a much longer time horizon than what account owners investing for K-12 education goals would likely need.
Static option: Allows the account owner to select one or more of the lnvestEd Portfolios and remain in the selection as the designated beneficiary ages without being tied to the age of the beneficiary. Many account owners want a more active role in determining the allocation of their accounts. This option is designed for designated beneficiaries of any age.
This option allows the account owner to choose one of the 10 InvestEd Portfolios within a specific risk horizon that may be outside the age range of the designated beneficiary. By remaining in these static portfolio options, the account will not participate in the automatic exchange feature offered by the age-based option. Account owners may forfeit some of the benefits of diversification and risk management goals sought by the age-based option and could be subjected to greater market risk.
No matter the investment option chosen, account owners can only change their investment twice each calendar year or upon a change in the account's designated beneficiary.
The static option, or the Individual Fund Portfolios noted below, may be more beneficial than the age-based option for K-12 expense needs since these scenarios can be quite different than those using 529 plans to save for higher education. Account owners investing for K-12 goals may need their money much sooner than someone saving for higher education goals.
This chart illustrates a representative allocation based upon the applicable target asset allocation ranges for each InvestEd Portfolio and may not reflect actual InvestEd Portfolio allocations. Allocation percentages may change over time at the discretion of the InvestEd Portfolios' investment manager. This risk and potential return arrows show our assessment of the potential levels of risk vs. potential return among the InvestEd Portfolios. But keep in mind that investments that offer higher potential returns may involve greater risk of loss as well. All InvestEd Portfolios involve a certain degree of risk, and there can be no assurance that any of these portfolios will experience more or less risk or potential return than any other InvestEd Portfolio. Please refer to the InvestEd Portfolios Prospectus for additional information.
(As of Sept. 1, 2020)
These portfolios allow the account owner to create a custom portfolio of individual mutual funds from a diverse offering of U.S. Equity Funds, Global/International Equity Funds, FixedIncome Funds, and Specialty Funds from Ivy Funds.
Significant Event On December 2, 2020, Waddell & Reed Financial, Inc., the parent company of Ivy Investment Management Company, the investment adviser of the Ivy Funds, and Macquarie Management Holdings, Inc., the US holding company for Macquarie Group Limited’s US asset management business (“Macquarie”), announced that they had entered into an agreement whereby Macquarie would acquire the investment management business of Waddell & Reed Financial, Inc. (the “Transaction”). The Transaction closed on April 30, 2021. The InvestEd Portfolios and the Ivy Funds, as part of Delaware Funds by Macquarie, are now managed by Delaware Management Company, and Delaware Distributors, L.P. is now the distributor of the Ivy Funds and the InvestEd Portfolios. Ivy Distributors, Inc. remains the program manager and distributor to the Ivy InvestEdSM 529 Plan, which is part of AZ529, Arizona’s Education Savings Plan. Ivy Distributors, Inc. is one of multiple financial institutions eligible to offer investments under AZ529.
Risk factors: Past performance is not a guarantee of future results. An investment in the Ivy InvestEd 529 Plan is subject to risk. Your investment return and principal value will fluctuate, and your investment, when redeemed, may be worth more or less than your original cost.
The Ivy InvestEd 529 Plan is offered by Ivy Distributors, Inc. as part of AZ529, Arizona’s Education Savings Plan. Ivy Distributors, Inc. is one of multiple financial institutions eligible to offer investments under AZ529.
Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the Ivy InvestEd 529 Plan. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy InvestEd 529 Plan Program Overview, and the Ivy InvestEd 529 Plan Account Application. All of these items are available from these links or from a financial professional. Please read the prospectus carefully before investing.
Before investing, non-residents or taxpayers of states other than Arizona should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors than those offered under the Ivy InvestEdSM 529 Plan. Please consult your tax professional regarding your personal tax situation.
Accounts are not insured by the State of Arizona, AZ529, Arizona’s Education Savings Plan, the Arizona State Treasurer’s Office or any other governmental entity, Ivy Distributors, Inc., or any affiliated or related party, and neither the principal deposited nor any investment return is guaranteed by any of the above referenced parties. The Arizona State Treasurer’s Office is the Administrator of AZ529, Arizona’s Education Savings Plan.
The information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in the understanding the issues discussed. Ivy Distributors, Inc., nor their associates offer tax, legal, or accounting advice. You may want to consult with your accountant or tax professional to discuss your personal situation. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance.