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October 28, 2020 at 02:47 PM
(Related: Top 10 Direct-Sold 529 College Savings Plans)
Morningstar announced updates to its analyst ratings for 61 of the biggest 529 college savings plans in the U.S. on Tuesday. These plans represent 97% of the more than $363 billion in 529 plan assets as of Aug. 30.
“The college savings plan industry is maturing,” Madeline Hume, manager research analyst on Morningstar’s multi-asset and alternative strategies team, said in a statement. “Asset growth is slowing, and 529 plans are increasingly having to cut costs to stay competitive.”
Hume noted that 529 investment quality has improved, and several plans have enhanced their asset-allocation approach to smooth the transition from stocks to bonds over time, which should continue to benefit investors, she said.
This year, Morningstar manager research analysts awarded three Gold ratings, 10 Silver ratings, 22 Bronze ratings, 18 Neutral ratings and eight Negative ratings to 529 college savings plans.
“We also enhanced our ratings methodology, placing greater weight on our price assessment,” Hume said. “Consequently, we downgraded the ratings of numerous advisor-sold plans that tend to charge higher fees. On the flipside, we upgraded the ratings of various direct-sold plans that charge lower fees.”
See the gallery for Morningstar’s 14 top-rated college savings plans. All of these plans are direct-sold.
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