Similarly, Richard A. Davies, an executive at Alliance Capital who oversees the nationwide marketing campaign for the Rhode Island-based plan from his firm, said that about a third of all new investor dollars were now going into its insured fixed-income portfolio, currently yielding about 4.45 percent a year.
Two years ago, he said, investors were directing about 40 percent of their college savings funds into all-stock portfolios. That share has plunged to about 12 percent.
These trends trouble some financial planners. "These guaranteed plans are very exciting for someone concerned about the safety of their savings," said Steven Klane, a partner at Sands & Klane, an accounting and financial planning firm based in Minneapolis. "But investors should be seeking to exceed the rate of inflation and grow their college funds."
Despite the gains of fixed-income funds, fund managers report that age-based portfolios remain popular, and most advisers recommend them. A portfolio for an infant or preschool child would generally consist almost entirely of a mixture of equity mutual funds.
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