CHICAGO, Oct. 27, 2011 /PRNewswire/ -- In an effort to
help college savers and financial advisors select the best 529
college savings plans, Morningstar, Inc. (NASDAQ: MORN), a leading
provider of independent investment research, today issued its
annual research study and ratings based on an analysis of the
nation's largest 529 plans. The company has issued updated
Morningstar Analyst Ratings and Reports on 58 plans that together
manage more than 95% of the $133
billion in U.S. 529 plan assets.
Six 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 Ohio Tuition Trust Authority;
- Utah Educational Savings Plan, managed by the agency of the
same name; and
- Virginia's CollegeAmerica,
managed by American Funds.
In addition, 15 plans received "Above Average" ratings, 30 plans
received "Average" ratings, and seven plans were rated "Below
Average."
"Overall, the 529 industry has grown more competitive and
responsive to college-savers' needs over the past year," said
Laura Pavlenko Lutton, editorial
director for fund research at Morningstar and a lead author of the
study. "Plans have lowered fees, offered better investment options,
and expanded distribution choices. None of the plans we reviewed
this year warranted a 'Bottom' rating."
The Morningstar Analyst Rating for 529 Plans gives 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 administration; and the
costs associated with the plan. Analysts then assign ratings of
"Top," "Above Average," "Average," "Below Average," and "Bottom."
529 plans receiving a "Top" rating incorporate the industry's best
practices, including solid investment choices at a fair price.
Morningstar's comprehensive study—the 2011 529 College Savings
Plans Research Paper and Industry Survey—also compared the
performance and fees of 529 investment options and quantified the
tax benefits associated with each state's 529 plans. Here's a
summary of the study's findings:
- 529 plan assets increased by 12 percent over the previous 12
months through Sept. 30, 2011. That
growth outpaced market returns for the period.
- Conservative allocation options in 529 plans have gained the
most in asset flows during the first nine months of 2011 among
Morningstar's static-allocation categories.
- The tax benefits of a 529 plan improve returns for investors
relative to similar mutual funds, which can add up to significantly
higher returns over the long term.
- Virginia had the most 529 plan
assets of any state, with more than $29
billion in its advisor-sold and direct-sold plans.
- "Open architecture" plans—which include a variety of asset
managers' funds in their offerings—did not have a consistent
performance edge during the past year over "closed architecture"
plans, which feature just a single firm's portfolio
strategies.
- Categories of 529 investment options slightly trailed their
open-end fund counterparts over the past five years as of
Sept. 30, 2011, but the lead has
changed hands in the midst of heightened market volatility. Several
529 categories led their corresponding open-end fund categories
just two months earlier.
This is the eighth year that the company has reviewed 529 plans,
and the second year that Morningstar has provided Analyst Ratings
on plans as well as quantitative Morningstar Ratings on the
investment options contained within them. To access the full
Morningstar 529 College Savings Plans Research Paper and Industry
Survey, please visit: http://global.morningstar.com/529Survey2011.
For a full list of Analyst Ratings for each of the 58 plans, go to:
http://global.morningstar.com/529PlanRatingsChart2011. 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/2011top529.
In addition, individual investors who subscribe to
Morningstar.com may use the site's interactive 529 Plan Center to
view the Morningstar Analyst Ratings for 529 college savings plans,
accompanying analysis, and data on the plans' investment options.
The research and ratings are also available on Morningstar Office, the company's global
practice and portfolio management platform for independent
financial advisors, as well as on Morningstar Direct, a web-based
global investment analysis platform for institutional investors.
Additionally, the new ratings and reports will be available in
November through Morningstar Advisor Workstation, a web-based
modular platform that provides financial advisors with investment
planning, client presentation, portfolio analysis, and investment
research tools.
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
products and services for individuals, financial advisors, and
institutions. Morningstar provides data on approximately 330,000
investment offerings, including stocks, mutual funds, and similar
vehicles, along with real-time global market data on more than 5
million equities, indexes, futures, options, commodities, and
precious metals, in addition to foreign exchange and Treasury
markets. Morningstar also offers investment management services
through its investment advisory subsidiaries and has more than
$167 billion in assets under
advisement and management as of Sept. 30,
2011. The company has operations in 26 countries.
©2011 Morningstar Inc. All rights reserved.
MORN-R
Media Contact:
Shawn Malayter, 312-696-6050 or
shawn.malayter@morningstar.com
SOURCE Morningstar, Inc.