Downgrades Outnumber Upgrades in Morningstar's Annual Update of 529 College-Savings Plan Ratings

CHICAGO, Oct. 30, 2018 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced new Analyst Ratings and reports for 62 of the nation's largest 529 college-savings plans, which represent approximately 95 percent of the more than $300 billion in 529 plan assets as of Sept. 30, 2018. The five-tiered, qualitative Morningstar Analyst Rating™ scale has three positive levels—Gold, Silver, and Bronze—in addition to Neutral and Negative ratings. This year, Morningstar manager research analysts awarded four Gold ratings, nine Silver ratings, 18 Bronze ratings, 26 Neutral ratings, and five Negative ratings to 529 college-savings plans. The full list is available here.

"The 529 industry continues to make significant fee cuts, so plans standing still on fees have become increasingly unattractive," said Leo Acheson, associate director of Morningstar's multi-asset and alternative strategies team. "Plans have also continued to improve their investment lineups. For example, the Oregon College Savings Plan received a notable upgrade to Bronze from Neutral, as it switched program managers and added strong offerings from firms such as Vanguard, DFA, and T. Rowe Price. Still, we downgraded more plans than we upgraded this year, as several plans under coverage have not kept pace with improvements across the landscape."

In 2018, Morningstar analysts upgraded two plans and downgraded nine plans:

The 31 plans that earned Gold, Silver, or Bronze ratings are considered Morningstar Medalists, which are likely to offer the best investment experiences for college savers. A Neutral rating indicates plans that are adequate but have room for improvement and a Negative rating indicates at least one major flaw within a plan, in Morningstar's view.

The Morningstar Analyst Rating for 529 plans gives investors saving for a child's college education a tool to help comprehensively assess 529 plan options. To determine a plan's rating, Morningstar analysts consider five factors: the design of the plan's investment options; an assessment of the plan's underlying money managers; the stewardship practices of the plan's program manager and state overseer; whether the plan's investment options are a good value proposition compared with those of its peers; and the plan's risk-adjusted performance. In limited instances, Morningstar also takes into consideration unique benefits that a plan offers to college savers, including local tax breaks, grants, and scholarships.

Also published today is a new research paper, "New Lessons About 529s" from Morningstar's Investor Success Project, that aims to provide new research on investor goals and behavior. The research paper uses survey data to reveal more rationale behind how and why American families are not taking advantage of 529 college-savings plans.

A summary of the 529 college-savings plan ratings is available on Morningstar.com here, along with additional resources on how to make the most of 529 plans. Individual investors who are Premium Members of Morningstar.com may use the site's interactive 529 Plan Center to view the Morningstar Analyst Ratings for 529 college-savings plans, accompanying analysis, and data on the plans' investment options.

The research and ratings are also available in Morningstar® Advisor Workstation^SM, Morningstar Office^SM, and Morningstar Direct^SM, the company's core investment research and analysis platforms. Morningstar® ByAllAccounts^SM aggregates data from more than 50 529 college-savings plans and delivers it to portfolio accounting platforms. Morningstar also offers a family of 529 college-savings plan indexes. More information is available at http://www.morningstar.com/company/.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $207 billion in assets under advisement and management as of Sept. 30, 2018. The company has operations in 27 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund's or a fund's or separately managed account's underlying securities' creditworthiness. This press release is for informational purposes only; references to securities or a separately managed account investment strategy in this press release should not be considered an offer or solicitation to buy or sell the securities or to invest in accordance with that strategy.

©2018 Morningstar, Inc. All Rights Reserved.

MORN-R

Media Contact:
Rebecca Rogalski, +1 312 244-7771 or [email protected]

SOURCE Morningstar, Inc.

Related Links

https://www.morningstar.com