Commentary: First Quarter 2017 plan performance rankings

http://www.savingforcollege.com/articles/commentary-first-quarter-2017-plan-performance-rankings-1058

Financial Professional Content

Each quarter Savingforcollege.com analyzes the investment performance figures for thousands of 529 portfolios and ranks the 529 savings plans from best to worst for one-, three-, five-, and 10-year investment performance. We rank plans that consumers can enroll in directly, as well as those sold through brokers and fee-based financial planners).

In producing our rankings, we compared the reported investment performance of a subset of portfolios from each 529 savings plan. We use a subset because plans vary greatly in their underlying investment options. We use a representative subset of options to compare plans on an apples-to-apples basis. The "performance score" determines the ranking. For more details, please view our methodology.

It is important to remember that this data represents historical performance. Past performance over any period is not a guarantee of future results.

Top performing 529 plans

For the most part those plans that have performed well continued to perform well. However, none of the top-ranked plans landed in the top ten over every time period. Because these are relative rankings, changes in one plan can have a direct impact on the relative performance of their peers. For example, the transition of the DC 529 plans resulted in two of the strongest-performing plans with over ten-years of performance history being removed from the rankings. Remember, the advisor-sold plan from Calvert was shuttered and rolled into the direct-sold plan. And while the new plan has lower fees and high-quality investment options, it lacks sufficient performance history to be ranked.

Source: Savingforcollege.com - *As of 2017-03-31

Remember, unlike the retail mutual fund industry where you have thousands upon thousands of funds and dozens of share classes, the 529 landscape is relatively small, with only direct-sold plans and 30 advisor-sold plans ranked each quarter. So what happens is that when a 529 plan transitions to a new manager or otherwise incurs a change significant enough to remove its performance history and start anew, its peers become the new standard in performance, and shift rankings slightly for the remaining plans.

Also consider overall equity returns in the first quarter was positive but uneven, with a new President installed and uncertainty causing volatility from day-to-day that captured up- and down-capture for the plans.

You can find the full performance rankings here.