A roundup of investment news.
Best and Worst 529 Plans Chosen
Analyst Greg Brown recently unveiled Morningstar's best and worst 529 plans for this year, and the biggest news was how much the market's woes hurt Oppenheimer's offerings. Here's the list:
Best 529 College-Savings Plans
Ohio CollegeAdvantage 529 Savings Plan
Ohio is in an interesting position. The state has two plans at opposite ends of the quality spectrum, with this direct-sold plan securely in the "best" camp. One of the most important features of this plan is that the Ohio Tuition Trust Authority not only created the plan, but it also manages it directly.
Indiana CollegeChoice 529 Direct Savings Plan
This direct-sold plan is a newcomer to Morningstar's 529 best list. Upromise Investments--a subsidiary of the popular Upromise rewards program--took over this plan from J.P. Morgan in the fall of 2008 and upgraded it to a best-in-class choice for investors.
The Utah Educational Savings Plan Trust
For those who want a tax-sheltered way to save for college using Vanguard index funds, this is the plan. Utah's 529 plan has long been a favorite of ours and remains a strong choice for its low costs, flexibility, and tried-and-true Vanguard index funds.
Virginia Education Savings Trust and Virginia CollegeAmerica 529 Savings Plan
The final two plans are the only carry-overs from last year's best list. The Education Savings Trust has a lot in common with Ohio's direct-sold plan. Similar to the Buckeye plan, Virginia not only sponsors the plan but also manages it. The advisor-sold College-America plan remains a favorite for its large selection of mostly first-rate American Fund mutual funds that give investors access to a broad array of asset classes, including emerging markets, small-cap foreign stocks, and foreign fixed-income securities.
Worst 529 College-Savings Plans
Nebraska State Farm College Savings Plan
In November, this plan overhauled its underlying holdings with Oppenheimer mutual funds, and the timing couldn't have been worse. Just as Oppenheimer Core Bond entered the plan as a prominent fixed-income holding, it imploded, dragging down shareholder assets in both the plan's age-based options and its fixed-allocation options.
New Jersey Best 529 College Savings Plan
The first strike against this plan is its overly aggressive age-based option combined with a lack of flexibility. Even after a recent modification on April 1, the plan's single age-based option can still have up to 60% of assets in equities in the years just before enrollment and have up to 35% in equities when a beneficiary is enrolled in college.