September 5, 2013

Saving in 529 Plans Continues to Rise

Assets increased since first quarter and last year

Assets in 529 college savings plans increased slightly in the second quarter of 2013, according to data from Strategic Insight. Total assets topped $183 billion, a 1.8% increase over last quarter and a nearly 17% increase from last year’s second-quarter total.

“From an industry asset level perspective, 529 saving plans continue to reach year-over-year all-time highs,” according to Strategic Insight.

The company released a report Thursday highlighting second-quarter results for college savings plans. Inflows were estimated at nearly $3 billion, up from $2.5 billion for the same period last year. However, inflows have tapered off since their high of $3.3 billion last quarter.

Assets in prepaid plans topped $22 billion in the second quarter, down slightly from earlier this year. Compared to the second quarter of 2012, prepaid plans added $652 million in assets.

Looking at open plans only, assets increased 0.5% in the second quarter, and nearly 5% since last year. There are more than 1 million active accounts, Strategic Insight found, a 0.7% increase since the first quarter.

Out of 20 prepaid plans, 17 provided data for gross sales to assets ratios. Gross contributions were more than 2.5% of assets, according to the report. The ratio of contributions minus distributions to assets was over 1.2%.

Strategic Insight also named the 10 best 529 plans based on their second-quarter assets. The ranking is unchanged from last quarter.
Here are the top plans, listed by fund name and distributor:

  1. College America; American Funds
  2. New York's CSP-Direct; Vanguard
  3. UNIQUE College Investing Plan; Fidelity
  4. The Vanguard 529 Savings Plan; Vanguard
  5. CollegeBoundfund; AllianceBernstein
  6. NextGen College Investing Program; Merrill Lynch
  7. Utah Educational Savings Plan; State of Utah
  8. ScholarShare College Savings Plan; TIAA-CREF
  9. U.Fund College Investing Plan; Fidelity
  10. BlackRock CollegeAdvantage 529 Plan; BlackRock

American Funds is the top administrator of 529 plans, despite only being offered in Virginia, according to Strategic Insight. In the second quarter, the company managed $39 billion in its College America fund, up 18.4% from last year.

Upromise Investments, which offers plans in 10 states, managed more than $37 billion in the second quarter, up more than 19% since last year. Together, American Funds and Upromise hold more than 40% of the market.

TIAA-CREF offers plans in 11 states, although Strategic Insight estimates it only holds about 9% of the market. The firm managed nearly $17 billion in the second quarter, up 15.5% from last year.

Fidelity managed more than $13 billion in plans in Arizona, Delaware, Massachusetts and New Hampshire. Assets increased nearly 13% since the second quarter of 2012.

Although it ranked only fifth, T. Rowe Price, which manages $8.6 billion in plans in Alaska and Maryland, added the most assets, increasing 19.3% since last year.

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