CHICAGO, Oct. 25 /PRNewswire/ -- Morningstar, Inc.
(Nasdaq: MORN), a leading provider of independent investment
research, today issued its newly enhanced study of 529 college
savings plans, based on a complete evaluation and analysis of 53 of
the nation's largest 529 plans.
This year's study includes new analyst ratings and reports along
with quantitative ratings, which represent Morningstar's most
comprehensive effort to date to provide research and analysis into
these popular investment vehicles. This is the seventh year that
the company has reviewed 529 plans, but for the first time,
Morningstar is now providing ratings on plans as well as the
investment options contained within them, setting a new standard
for depth and breadth of 529 plan research.
New Morningstar Analyst Ratings and Research on
529 Plans
To help college savers and financial advisors select the best
529 plans, Morningstar has introduced new Morningstar Analyst
Ratings and Reports on 53 of the largest plans that together manage
more than 90% of the $176 billion in
U.S. 529 plan assets.
The Morningstar Analyst Ratings give those saving for their
child's college education a comprehensive assessment of an entire
529 plan. To determine a plan's Analyst Rating, Morningstar's
mutual fund analysts consider five factors: the quality of the
portfolio of investment options; the investment options'
performance; the skill of the options' managers; the stewardship
practices of the 529 plan's program manager; and the costs
associated with the plan. Plans are then assigned ratings of "Top,"
"Above Average," "Average," "Below Average," and "Bottom."
Five plans received "Top" Morningstar Analyst ratings this year.
They are (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; Ohio's CollegeAdvantage 529 Savings Plan,
managed by OTTA; and Virginia's
CollegeAmerica, managed by American Funds.
"The 529 plans receiving a 'Top' rating incorporate the
industry's best practices, including solid investment choices at a
fair price," said Laura Pavlenko
Lutton, editorial director in Morningstar's Fund Research
Group and an author of the study.
In addition, 15 plans received "Above Average" ratings, 29 plans
received "Average" ratings, three plans were rated "Below Average,"
and one plan received a "Bottom" rating. The full list of Analyst
Ratings for each of the 53 plans is here:
http://global.morningstar.com/529PlanRatingsChart2010.
"We're not confident in the plans rated 'Below Average' and
'Bottom,'" Lutton said. "Their investments aren't very compelling,
and many plans' fees are too high."
New Quantitative Morningstar Rating for 529
Investment Options
In addition to the Morningstar Analyst Ratings and Research for
529 Plans, Morningstar also released new quantitative, proprietary
data designed to help investors better compare more than 4,000
different 529 investment options. Specifically, Morningstar grouped
529 investment options into categories and compared their past
risk-adjusted performance to arrive at a Morningstar Rating (better
known as the "star rating") for individual investment options.
"Because 529 plans are offered by individual states, it's
difficult to compare them and feel confident that you're making a
smart decision with your college-savings dollars," Lutton said.
"Morningstar's Analyst Ratings for 529 plans will help investors
quickly identify best-in-class plans, and from there, parents,
grandparents, and financial advisors can use Morningstar's
quantitative ratings and data to compare investment options'
performance, fees, and asset allocation."
Both enhanced ratings and reports will provide a broad and
thorough new resource for financial advisors looking to recommend
529 plan options to their clients. Advisors and institutions that
subscribe to Morningstar® Principia®, Morningstar® Direct(SM),
and Morningstar® Office will have exclusive access to
Morningstar 529 College Savings Plan Ratings and Reports, which
include Morningstar's 529 plan and investment option ratings, risk
and return ratings, as well as the asset-allocation paths of
investments for parents targeting a broad range of enrollment dates
for their children. The reports and data are also available through
Morningstar Licensed Data feeds. The 529 plan ratings and reports
are also available for advisors who subscribe to Morningstar®
Advisor Workstation(SM).
Individual investors who subscribe to Morningstar.com will have
access to a new interactive 529 Plan Center, which houses the
Morningstar Analyst Ratings for 529 College Savings Plans,
accompanying analyst reports, and data on the plans' investment
options.
2010 529 Industry Research Paper
To accompany these new ratings and reports, Morningstar also
released a comprehensive study of the 529 industry. In the 2010 529
College Savings Plans Research Paper and Industry Survey,
Morningstar compared the performance and fees of 529 investment
options and quantified the tax benefits associated with each
state's 529 plans.
Morningstar found that even though 529 plans are on average more
expensive than mutual funds, tax incentives and strong investment
management make them compelling vehicles for college savings.
"As 529 plans have cut their fees and improved their investment
choices, they've become much more appealing," Lutton said. "But
some plans are stronger than others, and investors still need to
weigh their options carefully."
To access Morningstar's 529 College Savings Plans Research Paper
and Industry Survey, please visit
http://global.morningstar.com/2010529Survey. A summary of the
survey is also available in Lutton's Fund Spy column, available
today on Morningstar.com at:
http://www.morningstar.com/goto/top529.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment research in North
America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on approximately 360,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 4 million equities,
indexes, futures, options, commodities, and precious metals, in
addition to foreign exchange and Treasury markets. The company has
operations in 21 countries.
©2010 Morningstar Inc. All rights reserved.
MORN-R
Media Contact:
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Shawn Malayter, 312-696-6050
or shawn.malayter@morningstar.com
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SOURCE Morningstar, Inc.
Copyright . 25 PR Newswire