As ETFs continue their creep into ever-more crannies of the investing world, some experts are questioning whether they belong in 529 college-savings plans. Jane Hodges explored that issue in Monday's Wall Street Journal.

ETFs are attractive because of their generally low fees, but their liquidity and tax benefits are negated by including the funds in 529s, which are already tax-efficient. On top of that, Hodges writes, 529s that are advisor-sold lose the benefit of low cost.

The growth of ETFs looks likely to continue, nevertheless.

"I'd expect to see more and more 529s add [ETFs] to their offerings. They're getting a lot of publicity," Marilyn Plum, a financial planner with Ballou Plum Wealth Advisors in Lafayette, California, told the WSJ.

Mentioned in the article is Barclays' iShares 529 plan, which includes nothing but ETFs. The Arkansas-sponsored plan has collected $600 million so far from 200 advisors. 

Edited by: Adam Kommel


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