my529 introducing stable value fund

PIMCO Interest Income Fund to be added to Age-Based and Customized options

On August 17, 2018, my529 will add the PIMCO Interest Income Fund, a stable value fund, to all predetermined Age-Based investment options, and as an optional underlying fund for owners of Customized Age-Based and Customized Static accounts who design their own investment allocations.

Stable value refers to an asset class that focuses on capital preservation and daily liquidity, while providing steady returns to investors. A stable value fund invests in high quality short-term and intermediate-term government and corporate bonds. The fund contracts with insurance companies and banks to help smooth investment volatility using wrap contracts. A wrap contract typically allows investors to transact at their original invested balance plus any interest earned on the investment.

The PIMCO Interest Income Fund is run by Pacific Investment Management Company (PIMCO), an investment firm based in Newport Beach, California, with $1.77 trillion in assets under management as of March 2018.

The introduction of the PIMCO Interest Income Fund will reduce the allocation percentages of the Vanguard Short-Term Investment Grade Fund and the FDIC-insured accounts in my529’s predetermined Age-Based investment options. You can view the new asset allocations and glide paths for the predetermined Age-Based options in the accompanying table.

The change is automatic and no action is required by owners of predetermined Age-Based accounts. The addition of the fund does not count as an investment option change for account owners in the predetermined Age-Based investment options.

Customized Age-Based and Customized Static account owners who choose to invest in the PIMCO Interest Income Fund can determine the allocation percentage that is appropriate for them. However, adding the fund to a customized investment option will count as one of two allowable investment option changes in a calendar year.

Predetermined Static investment options are not affected by the change.

Note: The PIMCO Interest Income Fund may increase the annual Asset-Based Fees for the predetermined Age-Based options, depending on the portfolio applicable to the age bracket of the beneficiary. However, the higher cost is expected to be offset by higher returns and reduced volatility. The initial investment management fee for the new fund is 0.129 percent. In the future, the management fee could be higher or lower depending on the total invested assets under management. (my529 is also reducing the Administrative Asset Fee for all the predetermined Age-Based and Customized options. See story here.)

Read the PIMCO Interest Income Fund Fact Sheet for more information.

If you have questions about the PIMCO Interest Income Fund or the changes to the predetermined Age-Based options, contact my529 at info@my529.org or call toll-free 800-418-2551.