Oct. 15, 2012
/PRNewswire/ -- Continuing its longstanding effort to help college savers and financial advisors choose the best 529 college savings plans, Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced new Analysts Ratings, research, and reports for 64 of the nation's largest 529 college savings plans. Together the plans represent more than 95% of the
in U.S. 529 plan assets. Of these plans, Morningstar has identified 27 that are likely to outperform their peers on a risk-adjusted basis over a full market cycle.
Morningstar has been analyzing 529 plans for nearly a decade. Now, it is using its qualitative Analyst Ratings scale, assigning medal ratings of Gold, Silver, and Bronze, as well as Neutral and Negative ratings. 529 plans receiving a Gold rating incorporate the industry's best practices and contain investment choices that are highly regarded by Morningstar analysts. Overall, these plans stand out as best of breed for their ability to help college savers meet their goals. Plans earning Silver or Bronze ratings are also viewed positively by Morningstar analysts, have notable advantages, and are likely to outperform their peers. A Neutral rating indicates plans that are not likely to deliver standout returns, but are also unlikely to significantly underperform. On the other end of the scale, a Negative rating indicates a plan's investment options have at least one major flaw likely to significantly hinder future performance, in Morningstar's view.
This year, four plans earned Gold ratings, four plans were rated Silver, 19 plans were rated Bronze, 33 plans were rated Neutral, and four plans received Negative ratings.
Gold medalists, in alphabetical order by state:
- Alaska's T. Rowe Price College Savings Plan, managed by T. Rowe Price;
- Maryland College Investment Plan, managed by T. Rowe Price;
- Nevada's The Vanguard 529 Savings Plan, managed by Upromise Investments; and
- Utah Educational Savings Plan, managed by the agency of the same name.
- Arkansas' iShares 529 Plan, managed by Upromise Investments;
- Michigan's Education Savings Program, managed by TIAA Tuition Financing;
- Ohio's College Advantage 529 Savings Plan, managed by Ohio Tuition Trust Authority; and
- Virginia's CollegeAmerica, managed by American Funds.
Plans that received a Negative Morningstar Analyst Rating:
- Kansas' Schwab 529 College Savings Plan, managed by American Century Investment Management;
- Minnesota's College Savings Plan, managed by TIAA Tuition Financing;
- Rhode Island's CollegeBoundfund (Advisor-sold), managed by AllianceBernstein; and
- Rhode Island's CollegeFoundfund (Direct-sold), managed by AllianceBernstein.
"Over the past 12 months, we continued to see 529 plans push for lower fees and higher quality investment options, and both of these trends directly benefit college savers," said
Laura Pavlenko Lutton
, director, fund of funds research at Morningstar. "Unfortunately, not all plans have jumped on these investor-friendly trends, and in a handful of cases where we found high expenses or poor-quality investments, we gave the plan a Negative rating."
The Morningstar Analyst Rating for 529 Plans gives those saving for a child's college education a tool to help comprehensively assess a 529 plan. To determine a plan's Analyst Rating, Morningstar's mutual fund analysts consider five factors: the plan's strategy and investment process; the plan's risk-adjusted performance; an assessment of the plan's manager; the stewardship practices of the plan's administration and parent firm; and whether the plan's investment options are a good value proposition compared to its peers. Analysts then assign forward-looking ratings of Gold, Silver, Bronze, Neutral, and Negative to each plan.