Morningstar’s analysts have identified nine 529 college-savings plans as the nation’s best, awarding them Gold and Silver Morningstar Analyst Ratings for 2013.
These top medals signal that Morningstar has the highest conviction in the plans’ ability to serve college savers well over the long term. In 2012, eight plans were awarded Gold and Silver Morningstar Analyst Ratings, which are forward-looking, qualitative ratings issued annually.
The Gold and Silver medalists represent direct-sold and advisor-sold plans, all of which exhibit strong menus of investment options, solid management, and reasonable fees. The 22 plans awarded Bronze medals have similar characteristics, but Morningstar’s analysts have less confidence that they’ll outperform their peers on a risk-adjusted basis over a full market cycle.
All told, Morningstar awarded medals to 32 plans in 2013, up from 27 in 2012. The increase in the number of medalist plans reflects significant improvements to 529 plans. Plans that improved their ratings in 2013 increased the likelihood of college savers’ success by upgrading the quality of the plans’ underlying investments, cutting expenses, and/or improving state tax benefits.
Similarly, very few 529 plans still include options that have performed poorly due to weak management or extremely high fees. As such, only four of the 64 plans rated earned Negative ratings, with 28 plans earning Neutral ratings. Morningstar did not rate 21 of the industry’s smallest plans.