July 6, 2021
Joint Legislative Audit
and Review Commission
Mary G. Morris, Chief Executive Officer
Michael Nguyen, Investment Director
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• Mary Morris
Virginia529 Overview and
Program Updates
• Michael Nguyen
Investment Update
Investment Director
Chief Executive Officer
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& Expanded Access
in 2021
Education Savings
Disability Savings
Access & Affordability
State Facilitated Private
Retirement
Defined Benefit 529 Programs,
Program Launch in 2023
Program Overview
Defined Benefit 529 Programs
• Prepaid529 – 1996-2019
• Legacy program continues to provide benefits for almost 60,000 Virginians
• Tuition Track Portfolio (TTP) opened 2/1/2021
• Offering more flexible and affordable solution for more Virginians
• Invest529 Portfolio option
• Combined Defined Benefit 529 Programs
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Defined Benefit
529 Programs
Tuition Track
Portfolio
Prepaid529
Program
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Key Numbers
†
• Active accounts = 1,885
• Contributions = $20.7 million
• Average units/account = 80
• Average beneficiary age = 8.4 years
• Unit price increase = 1.82% (7/1/2021)
†Statistics as of 6/8/2021
Early Snapshot of Tuition Track Portfolio*
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Tuition Track Portfolio Unit Analysis
VA Public Universities 2021-2022*
Annual Attendance Cost
# AT Units
4 Years**
*Data obtained from SCHEV
** # AT Units needed to cover 4 years of tuition and mandatory fees; Max TTP Units reflects the maximum amount (1,000) an account holder can purchase
*** Private College rates as of 2020-2021 school year
ABLEnow Timeline
ABLEnow has grown to become the second
largest ABLE program in the country with 12,000+
accounts
2014
ABLE Act authorizes states to develop ABLE programs
2015
Virginia is the first state to pass
ABLE legislation after the federal ABLE Act
2016
ABLEnow opens for national enrollment in December
2017-
2018
ABLEnow is one of the country’s fastest-growing ABLE programs
2018
ABLEAmerica opens for national enrollment in July
2021
ABLEnow is the largest independent ABLE program with
customers in all 50 states
#
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ABLEnow Snapshot
12,000+
active
accounts
65%+
YOY increase
in VA accounts
$100+
million
contributed
Account and event data through 7/21| confidential and unaudited
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Program enhancements
• First ABLE program to launch mobile application and wallet
• Contributions at enrollment enhancements
• Solutions being tested for Group Home bulk enrollment
• Building program awareness through media placements
• Ongoing updates to website accessibility, process improvements
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Vision & Strategy
Design
Implementation
Analysis &
Oversight
• Evolution of commitment to
statutory mission: increase access
to and affordability of higher
education
• Holistic plan structured to align
with the Virginia Plan for Education
• State and community partners
serving all regions of the
Commonwealth – emphasize
underserved and under-resourced
• Access Advisory Committee
supports Board in oversight and
evaluation
Expanded Access & Affordability Program
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Access & Affordability Program
Virginia
College
Advising Corps
GEAR UP
Virginia
Virginia
Latino
Higher
Education
Network
Communities
in
Schools
Virginia
Foundation for
Community
College
Education
Virginia
Community
College
System
Expand
SOAR VA
Partnerships
and Reach
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State-Facilitated Private Retirement
State-Facilitated
Private
Retirement 2023
Program
Advisory
Committee
Decision Briefs
& Board
Approval
Education &
Outreach
Strategic
Partnerships
Pilot Program
Established
Program
Assessment &
Legislative
Actions
Blueprint for Program
Development
Chapter 556, 2021 Virginia Acts of
Assembly tasks Virginia529 to
develop the new program, with
sponsorship and oversight by the
Virginia529 Board
A two-year planning and
implementation process is
envisioned to identify and engage
program partners and stakeholders,
develop, pilot and launch program
State-Facilitated Private Retirement
Program Implementation
• Establish Program Advisory Committee
• Select Third Party Recordkeeper
• Develop Program Participation and
Implementation Guidelines
• Conduct Outreach and Education Campaign
• Develop and Implement Investment Framework
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Investment Update
Updated Governance Process
Board Approves
Policies
IAC Recommends
Asset Allocation
Staff Implements
Asset Allocation
Manager
Selection
Reporting
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Defined Benefit 529 Programs: Actuarial Valuation
• Actuarial valuation compares the present value of assets against
the obligation of future payout
• Assumptions are reviewed and adopted annually by the Board
• Annual valuation report details the actuarial soundness of the programs
• JLARC commissions actuarial valuation audit every four years – 2021
audit completed
• What does actuarial funded status mean?
• A simple point in time measurement of fiscal health and sustainability of
programs
• Funded status is sensitive to long-term assumptions
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Prepaid529 Long-term Investment Return Assumptions
Year Return
1996 - 2000 8.0%
2001 7.5%
2002 7.0%
2003 6.75%
2004 – 2011 7.0%
2012 – 2014 6.75%
2015 – 2018 6.25%
2019 – 2020 5.75%
2021 5.5%*
• Long-term investment return assumption 5.5%* as of fiscal year 2021
• Future tuition growth assumption for Universities and Community Colleges
• 4% for 2021 & 2022 academic years
• 6% for 2023 academic year and thereafter
• Actuarial funded status as of June 30, 2020 was 157%
2020 Actuarial Valuation Report: Key Policy Assumptions
*Pending Board Approval
Defined Benefit 529 Programs Asset Allocation Policy Updates
Group/Asset Class 2019
US Large Cap
5.0%
US SMID Cap
5.0%
US Small Cap
2.0%
Intl Developed
5.0%
Emerging Markets
5.0%
Total Equities Group 22.0%
Real Estate
- Private 7.5%
Private Equity
13.0%
Hedge Funds
5.0%
Total Alternatives Group 25.5%
Convertibles
5.0%
High Yield
7.5%
Private Debt
5.0%
Emerging Market Debt
2.5%
Aggregate Fixed Income
17.0%
Multi
-Asset Credit 10.0%
Bank Loans
5.5%
Inflation Index Bonds
0.0%
Stable Value
0.0%
Total Fixed Income 52.5%
Total Prepaid529 Program
100.0%
Group/Asset Class 2021*
Global All Cap Equities 22.0%
Real Estate
- Private 10.0%
Private Equity
13.0%
Total Alternatives
Group
23.0%
Aggregate Fixed Income
20.0%
Multi
-Asset Credit 35.0%
Total Fixed Income 55.0%
Total Prepaid529 Program
100.0%
*Pending Board Approval
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Defined Benefit 529 Programs
Performance Drivers
Source: Virginia529 Performance Reports 2011-2020; Calendar Year Returns
Factors impacting performance
• Asset Allocation
• Global equity positioning
• Cyclical bias
• Defensive Fixed Income posture
• Maturing Private Market
Allocation
• Manager Selection
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Virginia529.com
Toll-Free 1.888.567.0540
[email protected]
able-now.com
Toll-Free 1.844.669.2253
customerservice@able-now.com
Call 1-888-567-0540 or visit Virginia529.com to obtain all program materials. Read them carefully before investing. An investor should consider the investment objectives, risks, charges, and
expenses of the programs before investing. For non-Virginia residents: before investing, consider whether you or the beneficiary’s home state offers any state tax or other state benefits such
as financial aid, scholarship funds, and protections from creditors that are only available for investments in that state’s qualified tuition program.
Call 1-844-NOW-ABLE or visit able-now.com to obtain information on the program. Seek the advice of a professional concerning any financial, tax, legal or federal or state benefit
implications related to opening and maintaining an ABLEnow account. Participating in ABLEnow involves investment risk including the possible loss of principal. For non-Virginia residents:
other states may sponsor an ABLE plan that offers state tax or other benefits not available through ABLEnow.
© 2020 Virginia College Savings Plan. All Rights Reserved.
Facebook.com/VA529 @Virginia529
VA529
Facebook.com/ABLEnowVA @ABLEnowVA
ABLEnowVA
- Appendix -
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Assets and Account Growth As of March 31, 2021
Programs Accounts
Assets Under
Management
Account Growth
Percent of
National 529
(and 529A)
Market
1
2
55,391 $3.1 -4.4%
3
392,079 6.9 9%
CollegeAmerica 2,461,194 84.4 2%
Totals
2,908,664 $94.4 21.5%
11,339 $60.9 28.4%
ABLEAmerica 1,114 15.7 49.5%
Totals
12,453 $76.6 10.1%
1. Total market share represents total VA529 and assets as a percent of total industry 529 and 529A assets. Industry data obtained from Strategic Insight.
2. Prepaid529 closed to new participants during 2019. There is no account growth.
3. Invest529, includes Tuition Track Portfolio.
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Assets Under Management and Account
Trends: 2001-2021
*As of May 31, 2021
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Assets Under Management and Account
Trends: 2002-2021
*As of May 31, 2021
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&
AUM and Total Accounts
VA529 ABLE Market Share
†
*As of March 31, 2021
†Industry data obtained from Strategic Insight
ABOUT SOAR VIRGINIA
SOAR Virginia is an early commitment scholarship program sponsored by
Virginia529. The program encourages students to commit to earning good
grades, being good citizens, and pursuing higher education and rewards
them with scholarship support up to $2,000
GOALS
Inspire students from low- and moderate-
income households to:
• Complete high school and earn diplomas
• Pursue higher education
• Complete higher education and earn
associate, bachelor or technical degree
PARTNERS
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Actuarial Valuation Reports – Plan Funded Status
Defined Benefits 529 Program Net of Fee Performance
as of 3/31/2021
Source: Bank of New York Mellon
Notes: Past performance is no guarantee of future results
Performance is presented net of investment management fees
Since
Inception
10 Years
5 Years 3 Years 1 Year
Calendar
YTD 3 Month
Inception
Date
Total Fund
6.51% 6.26% 8.24% 7.85% 29.19% 2.67% 2.67%
Oct-97
Total Fund Benchmark
6.07% 6.84% 9.20% 8.79%
27.85%
2.97% 2.97%
Oct-97
Total Equity
7.78% 8.94% 13.45% 11.81% 69.50% 4.57% 4.57%
Oct-97
Total Equity Benchmark
6.63% 9.35%
13.82%
11.97%
57.92%
4.84% 4.84%
Oct-97
Total Domestic Equity
8.74%
11.68%
14.91%
14.38%
72.08%
6.56%
6.56%
Oct-97
Domestic Equity Benchmark
8.46%
13.79%
16.64%
17.12%
62.53%
6.35% 6.35%
Oct-97
Total International Equity
6.88% 6.33% 12.08% 9.50% 66.83% 2.22% 2.22%
Oct-97
International Equity Benchmark
5.65% 5.33%
10.95%
7.01%
52.24%
3.01% 3.01%
Oct-97
Total Fixed Income
5.41% 4.27% 4.81% 4.71% 15.31% -0.79% -0.79%
Oct-97
Fixed Income Benchmark
5.44% 4.70% 5.90% 6.05%
18.30%
-0.73% -0.73%
Oct-97
Non
-Core Fixed Income
5.24% 4.94% 5.60% 4.96% 19.35% -0.42% -0.42%
May-05
Non
-
Core Fixed Income Benchmark
6.03% 5.89% 7.95% 6.55%
25.40%
0.17% 0.17%
May-05
Core Fixed Income
4.68% 2.96% 3.06% 4.07% 6.56% -1.59% -1.59%
Oct-97
Core Fixed Income Benchmark
4.61% 3.12% 3.26% 4.75% 4.59% -2.61% -2.61%
Oct-97
Alternatives
6.28% 7.46% 9.96% 11.73% 17.00% 10.21% 10.21%
May-05
Alternatives Benchmark
6.45% 7.86% 9.89% 9.96%
15.47%
10.34%
10.34%
May-05
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Net of Fee Performance
Source: Bank of New York Mellon
Notes: Past performance is no guarantee of future results
Performance is presented net of investment management fees
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as of 03/31/2021