Ever year, Morningstar ranks the best performing 529 Plans. Here’s a look at the best and the worst. Keep in mind that results will vary each year, so while one state’s investment portfolio might be up now, it could very well be down next year. That’s why you should follow the rules of thumb first!
To pick its top (and bottom) funds, Morningstar uses a variety of criteria, including portfolio diversification, fund quality, fees and flexibility. All of its top picks were well-rounded funds that don’t rely too heavily on any one area of the market. The name of the primary investment house is listed in parenthesis after the plan name.
Best Direct-Sold 529 Plans
- Alaska T. Rowe Price College (T. Rowe Price)
- Maryland College Investment Plan
- Nevada Vanguard 529 College Savings Plan
- Ohio CollegeAdvantage 529 College Savings Plan
These are all very good plans, and you can learn more about them on Morningstar’s website.
Best Broker-Sold 529 Plans
- Virginia CollegeAmerica
- Alaska John Hancock Freedom 529
- Maine NextGen College Investing Plan
- South Dakota CollegeAccess 529
Again, use the 529 page on Morningstar’s website to learn about these plans and those in every other state.
Worst 529 Plans
- Rhode Island CollegeBoundFund
- Georgia Path2College
- Nevada UPromise College Fund
- Wisconsin Tomorrow’s Scholar College Savings Plan
High fees, stewardship/management practices, and under-performance are factors that contribute to poor fund ratings.
If you want to compare fund performance over one-, three- and five-year spans, check out SavingforCollege.com’s Plan Performance Rankings. Keep in mind, however, that performance alone should not determine which 529 Plan you pick, especially in light of the relatively short track record for 529s and the abysmal recent losses on Wall Street.