Iowa is responding to a new found sense of conservation among savers in its 529 college savings program. The state will up the number of investment options by adding eight options and tweak the asset allocation in the plan's four existing aged-based portfolios. Three of the added funds are entirely new to the plan while the other five are those used Vanguard uses to create the age-based portfolios. All of the funds are managed by Vanguard, the state's partner on the program.

The three new funds add a conservative flavor to the plan when they debut on August 1. Each of the new options -- they are the Conservative Income Portfolio, Bond Index Portfolio and the Money Market Portfolio -- invest in either bonds or cash instruments.

Plan officials also said that the four existing age-based portfolios will be tweaked to add "additional asset stability" as the child nears college age. The most aggressive fund (Track A) now will diversify 20 percent of its portfolio out of equities when the child reaches age 10. Track A now maintains a 100 percent equity allocation through age 15.

"We recently took a close look at our investment offerings based on the feedback we have received from investors and determined that we needed to offer a broader array of investments for those who desire the flexibility of managing their own investment strategy," said Michael Fitzgerald, Treasurer of the State of Iowa in a statement. "We believe the new individual portfolios, complemented by our enhanced age-based savings tracks, have created an improved, high value and compelling college savings program that meets the needs of virtually every investor."

The Iowa plan has added 72,000 accounts and more than $500 million in assets since it was created in 1998. The average balance in the plan is a little less than $7,000 in assets.  

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