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TIAA-CREF wins bid for California 529

(June 14, 2011) - California's ScholarShare Investment Board has announced its intent to enter into an agreement with Tuition Financing Inc., a unit of TIAA-CREF, to manage the state's direct-sold 529 savings program when its current contract with Fidelity Investments expires later this year.

TFI is currently the program manager for 529 plans in 8 other states. The only other bidder for the $4.4 billion program in California was Union Bank & Trust Company of Lincoln, Nebraska, which currently manages Alabama's 529 savings programs. Fidelity Investments declined to bid on the California mandate, citing a strategic business decision.

TFI has proposed a menu of investment options in California comprised of TIAA-CREF funds along with funds from Pimco, T. Rowe Price and Dimensional Fund Advisors (DFA). Total expenses are expected to average 23 basis points (0.23%) in the index-based options and 58 basis points in the options using actively-managed funds.

No firm placed a bid for California's advisor-sold 529 plan, which holds over $300 million in assets. The ScholarShare Investment Board intends to explore its options in bringing on a manager of its choice or negotiating with TFI to take on the advisor-sold 529 as well, presumably through a partnership with one or more fund distributors that sell through broker-dealers.

For more information, click here.

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