Funds invested in 529 college savings plans rose by nearly 7 percent in the fourth quarter of 2013, according to new research from Strategic Insight.
Total 529 savings plan assets were an estimated $204.5 billion as of the fourth quarter 2013, reflect a 6.9 percent increase from the third quarter 2013 assets of $191.3 billion and a 21.3 percent increase from fourth quarter 2012 assets of $168.5 billion.
In contrast to other products, long-term mutual fund and ETF assets (excluding fund-of-fund affiliated) increased 6.1 percent during the past quarter to $12.6 billion from $11.9 billion. The fourth quarter total is also up 20.3 percent from the $10.5 billion recorded for the year-ago period.
Estimated 529 net inflows, the report shows, were $3.1 billion in the fourth quarter of 2013 compared to net inflows of $3.1 billion in the fourth quarter of 2012.
The graph below provides 529 savings plan industry assets and net flows for the last nine quarters. This chart reflects year-over-year highs in assets under management and therefore investor usage of 529 plans.
Estimated 529 net inflows (contributions minus withdrawals) were $3.053 billion in Q4 13 compared to net inflows of $3.138 billion in Q4 2012.
The report notes this “reflects that investors are successfully using 529 plans for their intended purpose of savings and spending their savings on QHEE (qualified higher education expenses).
“From an industry asset level perspective, 529 saving plans continue to reach year-over-year all-time highs,” the report adds. “Therefore investor interest in 529 plans and saving for education in a tax-efficient manner continues to rise, and especially as part of year-end tax planning.”
The charts on the next page provide data on the Top 10 529 savings plans by Q4 2013 assets and the Top 5 529 program managers by Q4 2013 asset.