on Thursday cut its management fee on its all investment funds, saving 133,000 accounts at least $500,000 a year.
TIAA-CREF Tuition Financing Inc., which manages one of the plans, also agreed to waive its fees on a conservative money market portfolio that has
for more than a year.
TIAA-CREF's Kerry Alexander, program director for Oregon's plan, said the insurer will make the same fee-waiver offer to its three other state 529 plans with a standalone money market investment option. Those plans are Connecticut Higher Education
, the
and Georgia's
.
The Oregonian
that the money market fund had posted a negative 0.3 percent return since March 2010. Other large money-fund managers have waived fees on mutual funds to ensure investors don't lose money in them.
The overall reduction in Oregon's management fee comes on top of fee reductions by underlying mutual funds in the direct-sold
managed by TIAA-CREF. Two portfolios -- its international equity index and inflation-linked bond -- saw total fee reductions of 33 and 14 percent.
Investors in the broker-sold
also will see fees reduced.
Oregon Treasurer Ted Wheeler
this week based on the network's jump in total investments from $746 million in early 2009 to nearly $1.4 billion at the end of March.
Currently, investors pay from $4.40 to $12 for every $1,000 invested in most
and even more in the broker-sold
.
About $1 of those annual fees go to the Oregon Treasury to manage and market the plans; the rest goes to plan sponsors TIAA-CREF Tuition Financing Inc. and MFS Investment Management.
Under Thursday's board action,
would fall to 50 cents per $1,000 as early as June 1, according to plan director Michael Parker.
The plan's underlying mutual funds shaved the fees they collect so that investors will now pay from $3.80 to $10.80 per $1,000 invested each year.
TIAA-CREF will waive the management fee it collects on the Money Market Portfolio to ensure investors don't lose what they've put into it. It will evaluate the fund performance each month and adjust its fees accordingly to ensure returns don't turn negative, officials said.
As of March 31, only 2,800 accounts have invested about $15 million in the portfolio, which is down 20 percent from a year ago.
The state board stopped short of dropping its own 0.05 percent management fee on the fund. Wheeler pushed to waive it, saying investors in the fund didn't expect to lose money. He also noted that Wall Street heavyweights Charles Schwab Corp. and MFS had waived fees on their money market funds.
But board members Lynn Hennion and Jennifer Cooperman said they worried about the precedent a waiver would set should other portfolios lose money in the future. They said the plan offered at least two other conservative investment options that were performing well. Hennion said investors should take responsibility for their own choices, and Cooperman noted that money market funds can lose money.
Plan director Michael Parker said the state would contact Money Market fund investors and let them know about the plan's other conservative options.