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By Adam Zoll and Kailin Liu | 04-19-2013 10:00 AM

Key Findings From Our 529 Industry Study

Our annual study examines how 529 college savings plans stack up on price, performance, and other factors versus non-plan mutual funds.

Adam Zoll: For Morningstar, I'm Adam Zoll. This week Morningstar's fund-of-funds team released its annual survey about the 529 industry. 

Here to talk about that survey and some of the findings is Kailin Liu; she is an analyst on Morningstar's fund-of-funds team.

Kailin, thanks for being here. 

Kailin Liu: Thank you.

Zoll: So, can you talk a little about what's in the survey, how your team goes about compiling it? 

Liu: Absolutely. I think it's important to make the distinction that this survey, which was recently released, is distinct from our plan ratings, which we released in October 2012. For the industry survey, we dig into some of the industry data and plan-specific data that we, the analysts, used to assign these ratings.

Zoll: And one the findings, for example, is about asset flows into 529s, which seem to be on the upswing? 

Liu: That's definitely true. Assets into 529 grew 25% from the end of 2012 compared to the end of 2011. This is due to a couple of things. For one, it's because of contributions, which is great. People are feeling more confident about putting money in college savings, and they are doing it, which is a good thing for college savers. Asset growth has also been helped by the growth of the market in 2012 as well.

Zoll: I thought there was some interesting findings regarding asset allocation within 529 plans. For example, in the broader mutual fund market, we're finding that asset flows continue to be drawn to safer fixed-income investments and that's reflected in the 529 asset flows as well, isn't it? 

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