Investment research firm Morningstar rates 529 plans in their annual “529 College Savings Plans Research Paper and Industry Survey”. They recently announced their top plans from the 2013 survey, although it appears the full study and state-specific analyst reports are only available in their paid Premium section. Below, I have listed all of the top-rated plans from each of the 2010-2013 survey years, including which plans were consistently top-rated all four years.
Morningstar now uses a Gold/Silver/Bronze rating scale for the top plans and Neutral/Negative for the rest. (In 2010 and 2011, they employed the same methodology but used Top, Above Average, Average, Below Average, and Bottom. Top is now broken up into Gold and Silver, and Above Average is now Bronze.) The criteria include five P’s:
- People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
- Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
- Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
- Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term? Is it judged likely to continue?
- Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.
Consistently Top-Rated Plans 2010-2013
- T. Rowe Price College Savings Plan, Alaska
- Maryland College Investment Plan
- Vanguard 529 College Savings Plan, Nevada
- CollegeAdvantage 529 Savings Plan, Ohio
- CollegeAmerica Plan, Virginia (Advisor-sold)
Gold and Silver-Rated Plans 2013 (source)