Morningstar Updates Analyst Ratings for 529 College-Savings Plans; Identifies 33 Medalists, Three Negative-Rated Plans

CHICAGO, Oct. 25, 2016 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced new Analyst Ratings and reports for 63 of the nation's largest 529 college-savings plans. 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 three Gold ratings, 10 Silver ratings, 20 Bronze ratings, 27 Neutral ratings, and three Negative ratings to 529 college-savings plans.

To view the full list of Analyst Ratings for the 63 plans, please click here. The plans together represent more than 97 percent of the more than $240 billion in 529 plan assets as of Sept. 30, 2016. The 33 plans that were awarded Gold, Silver, or Bronze ratings are considered Morningstar Medalists, which are likely to offer the best investment experiences for college savers. 

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, including the glide path followed by the age-based portfolios and the suite of investment options available; an assessment of the plan's underlying money managers; the stewardship practices of the plan's administration and parent firm; whether the plan's investment options are a good value proposition compared with those of its peers; and the plan's risk-adjusted performance. Morningstar also takes into consideration unique benefits that a plan offers to college savers, including local tax breaks, grants, and scholarships.

Compared with 2015, Morningstar analysts upgraded six plans and downgraded six plans:

"The 529 industry as a whole continues to improve as individual plans hone their strategies and reduce the fees levied on plan participants. Our updated ratings reflect this increasingly high standard, as we've upgraded a number of plans that have moved toward best practices and downgraded those that haven't kept pace," Leo Acheson, Morningstar's lead research analyst for 529 college-savings plans, said. "For example, we upgraded MOST Missouri's 529 Plan, which improved the breadth and quality of its offerings and lowered fees. On the flipside, we downgraded the iShares 529 plan for not embracing lower-cost iShares Core ETFs available to it."

529 plans receiving a Morningstar Analyst Rating of Gold incorporate the industry's best practices and contain investment choices that are highly regarded by Morningstar analysts. Overall, these plans stand out as best of breed for their ability to help college savers meet their goals. Plans receiving Silver or Bronze ratings are also viewed positively by Morningstar analysts and have notable advantages relative to their peers. A Neutral rating indicates plans that don't stand out from the crowd and generally have room for improvement from an investment quality or fee standpoint. On the other end of the scale, a Negative rating indicates at least one major flaw within a plan that is likely to significantly hinder future performance, in Morningstar's view.

Morningstar will host a webinar to discuss this year's ratings at 1 p.m. CT on Nov. 3, 2016; to attend, please register here. View additional content about 529 college-saving plans here. In May 2016, Morningstar published a study about asset allocation and glide path design, performance, fees, industry growth, and best practices for the 529 industry, a companion piece to the ratings.

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 70 529 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://global.morningstar.com.

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, and retirement plan providers and sponsors. Morningstar provides data on nearly 540,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on approximately 18.5 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of Sept. 30, 2016. The company has operations in 27 countries.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees nor should they be viewed as an assessment of a fund's or the fund's underlying securities' creditworthiness. This press release is for informational purposes only; any mention of a specific 529 college-savings plan should not be considered a solicitation by Morningstar.

©2016 Morningstar, Inc. All Rights Reserved.

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