On Target: Getting to know Target Enrollment Date funds

my529 understands that every family has a unique timeline and individual goals for education. So that you don’t have to research and select investments individually, we work hard to design various investment options and provide the information to help you determine which one will work best for you. Today we’ll focus on the Target Enrollment Date option, which offers a curated blend of investments to help you align your choice with your family’s needs.

The Target Enrollment Date option offers the convenience of selecting one portfolio that provides exposure to a blend of investments in a variety of asset classes. The “target” is the time frame during which the beneficiary aims to use the funds, which may range from K-12 to post-secondary needs. This brings us to the unique characteristic of the Target Enrollment Date option.

Target Enrollment Date portfolios adjust asset allocations each quarter to reduce risk exposure as the target year approaches. Early investment years automatically begin with higher percentages of the portfolio’s assets invested in stock mutual funds. Gradually, the Target Enrollment Date portfolio’s assets transition toward bond mutual funds and principal preservation (which includes the FDIC-insured cash accounts). This results in a glide path that is designed to produce lower expected returns but also a lower risk of loss as the portfolio approaches the target year. As the target year is reached, the investment’s glide path continues to transition and is eventually transferred into the Enrolled portfolio.

Choosing your Target Enrollment Date investment

Once you decide to invest in a Target Enrollment Date investment, you get to choose the particular portfolio. Many families opt into the portfolio with the target date that best matches the anticipated college enrollment date of the beneficiary. Others opt to match their risk tolerance levels or individual financial or educational needs and select a Target Enrollment Date portfolio that increases or decreases their equity exposure. Those interested in being more aggressive by having higher exposure to stocks can choose a portfolio with a later year than the beneficiary’s anticipated enrollment date; for those looking for a more conservative approach with a lower exposure to stocks, a portfolio dated prior to their anticipated enrollment window may suit best. With two investment option changes allowed per calendar year, you can also choose to move to an earlier or later target date to match your family’s changing needs or if your beneficiary’s timeline changes.

You can explore your options with our interactive visual at my529.org/investment-options.