Savingforcollege.com Rankings Show New York, Alaska, and Florida as Best-Performing 529 Plans

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Savingforcollege.com's 529 plan performance rankings as of December 31, 2011 show New York as having the 529 savings plan with the best one-year performance record, with Alaska's 529 savings plan placing first in three-year performance and Florida's 529 savings plan placing first in five-year performance.

Saving for college; 529 plans
Savingforcollege.com’s lists of top-10 performers in the one-year and five-year performance categories are dominated by 529 plans using either Vanguard funds or TIAA-CREF funds.

New York’s 529 College Savings Program was first among all direct-sold 529 plans in one-year investment performance as of December 31, 2011 and fifth in both three-year and five-year performance, according to Savingforcollege.com’s newly-released 529 Composite Performance Rankings. New York utilizes The Vanguard Group, Inc. for investment management services and Upromise Investments, Inc. as its program manager.

The T. Rowe Price College Savings Plan, sponsored by the state of Alaska, placed first for three-year investment performance as of December 31, 2011, while the Florida College Investment Plan was the top performer in the five-year performance category.

Savingforcollege.com’s lists of top-10 performers in the one-year and five-year performance categories are dominated by 529 plans using either Vanguard funds or TIAA-CREF funds. Top performers in the three-year category are much more diverse, and include 529 plans with investments in funds from T. Rowe Price, BlackRock, Wells Fargo, Hartford, AllianceBernstein, and Allianz/PIMCO.

One reason for New York’s success, according to Savingforcollege.com founder Joseph Hurley, is that state laws restrict the plan’s ability to invest in foreign stock funds. “Many international funds saw steep losses in 2011,” says Hurley, “and New York’s relative lack of exposure to foreign stocks ended up helping its 529 plan investors.”

In producing its quarterly rankings, Savingforcollege.com compares the reported investment performance of a subset of portfolios from the 529 savings plans in every state. Portfolios are selected based on their mix of stocks, bonds, and money-market funds, aiming for an apples-to-apples comparison in seven different asset-allocation categories.

“Overall, the year 2011 was a mixed one for 529 plans,” commented Hurley. “The S&P 500 returned 2.1 percent for the year, but only a couple of the 529 portfolios in our 100%-equity grouping managed to match that return. Fixed-income options performed much better than stocks during 2011, and any 529 portfolio with investments in inflation-indexed securities was able to provide a high return.”

Hurley cautions, however, that past performance does not guarantee future returns, and that a plan currently ranking high will not necessarily outperform its peers in the future. “Our rankings have shown significant movement among competing plans over the years,” he said.

The full reports showing one-year and three-year rankings for all direct-sold 529 plans can be viewed at http://www.savingforcollege.com/articles/2011-1-year-top-performing-direct-plans-q4/ . Savingforcollege.com also produces rankings for advisor-sold 529 plans along with all underlying investment dat, available through a subscription. Rankings are updated each quarter.

One-year Composite Performance Rankings (52 plans ranked)
1 New York: New York's 529 College Savings Program -- Direct Plan (Vanguard funds)
2 Pennsylvania: Pennsylvania 529 Investment Plan (Vanguard funds)
3 Vermont: Vermont Higher Education Investment Plan (mostly TIAA-CREF funds)
4 Minnesota: Minnesota College Savings Plan (TIAA-CREF funds)
5 Michigan: Michigan Education Savings Program (TIAA-CREF funds)
6 Florida: Florida College Investment Plan (multiple money managers)
7 Iowa: College Savings Iowa (Vanguard funds)
8 Kentucky: Kentucky Education Savings Plan Trust (TIAA-CREF funds)
9 Colorado: Direct Portfolio College Savings Plan (Vanguard funds)
10 Utah: Utah Educational Savings Plan (UESP) Trust (mostly Vanguard funds)

Three-year Composite Performance Rankings (46 plans ranked)
1 Alaska: T. Rowe Price College Savings Plan (T. Rowe Price funds)
2 Alaska: University of Alaska College Savings Plan (T. Rowe Price funds)
3 Maryland: College Savings Plans of Maryland -- College Investment Plan (T. Rowe Price funds)
4 Maine: NextGen College Investing Plan -- Client Direct Series (multiple fund families)
5 New York: New York's 529 College Savings Program -- Direct Plan (Vanguard funds)
6 Wisconsin: EdVest (Direct-sold) (mostly Wells Fargo funds)
7 West Virginia: SMART529 WV Direct (mostly Hartford funds)
8 Rhode Island: CollegeBoundfund (Alternative RI) (AllianceBernstein and Vanguard funds)
9 South Dakota: CollegeAccess 529 (Direct-sold) (multiple fund families)
10 Pennsylvania: Pennsylvania 529 Investment Plan (Vanguard funds)

Five-year Composite Performance Rankings (40 plans ranked)
1 Florida: Florida College Investment Plan (multiple money managers)
2 Utah: Utah Educational Savings Plan (UESP) Trust (mostly Vanguard funds)
3 Pennsylvania: Pennsylvania 529 Investment Plan (Vanguard funds)
4 Kansas: Schwab 529 College Savings Plan (multiple fund families)
5 New York: New York's 529 College Savings Program -- Direct Plan (Vanguard funds)
6 Ohio: Ohio CollegeAdvantage 529 Savings Plan (mostly Vanguard funds)
7 Nevada: The Vanguard 529 Savings Plan (Vanguard funds)
8 Wisconsin: EdVest (Direct-sold) (mostly Wells Fargo funds)
9 Michigan: Michigan Education Savings Program (TIAA-CREF funds)
10 Iowa: College Savings Iowa (Vanguard funds)

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Marie Osypian
JFH Innovative LLC
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