UESP’s Asset-Based Fee Structure Explained
UESP’s fee structure and low costs are key reasons Utah’s fast-growing 529 plan is popular with families saving for higher education.
UESP “offers compelling investment options at some of the lowest prices in the country,” according to Morningstar Inc., a leading provider of independent investment research to consumers. Low fees are a major factor in UESP earning the Gold rating in 2015 from Morningstar, as well as ranking highly in Morningstar’s ratings over the past 12 years.
UESP’s asset-based fee structure consists of two parts—the Operating Expense Ratio of the mutual funds available as underlying investments from Vanguard and Dimensional, and a UESP Administrative Asset Fee.
The Operating Expense Ratios of the Vanguard and Dimensional funds are expressed as a percentage of each fund’s assets. The Operating Expense Ratios do not appear on UESP quarterly account statements because the fees are deducted by the fund manager. There are no expense ratios assessed on FDIC-insured accounts. UESP pays the 0.005 percent investment expense ratio for the Public Treasurers’ Investment Fund.
The UESP Administrative Asset Fee is an annual fee charged on a monthly basis. Like the Operating Expense Ratio, the Administrative Asset Fee is expressed as a percentage and charged to an account on the last day of each month. The percentage varies from 0.11 to 0.20 percent depending on the selected investment option.
Added together, the Operating Expense Ratios of the Vanguard and Dimensional funds and the Administrative Asset Fee make up the total asset-based fee each UESP account owner pays.
According to Morningstar, the average asset-based fee of all 529 plans in the country was 0.74 percent, or $7.40 a year on a $1,000 investment. By contrast, UESP’s asset-based average is 0.23 percent, or $2.30 per $1,000 investment—a $5.10 difference. This average rate also translates to $23 per year on a $10,000 investment.
A table describing UESP’s fee structure in detail is found on page 53 of the Program Description and online at my529.org.