COLLEGE SAVINGS 101

Savingforcollege.com

Commentary: Third quarter 2016 plan performance rankings
http://www.savingforcollege.com/articles/commentary-third-quarter-2016-plan-performance-rankings-995

Posted: 2016-11-07

by Brian Boswell

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. Also remember that past performance is not necessarily an indicator of future returns.

Top performing 529 plans

For the most part those plans that have performed well continued to perform well. Two notable changes this quarter included the addition of a second period of top ten performance for Virginia inVEST and West Virginia SMART529 Direct plans. Both plans continue to reinforce their strong performance record.

3Q16 market commentary

The third quarter saw generally strong, steady growth across multiple indexes. However, the magnitude of gains varied widely depending on the index structure and sector composition. Most Information Technology indices made significant double-digit gains, while high-dividend stocks such as Utilities suffered as investors grew concerned over competition from fixed income security yields. The uneven returns are reflected in the disparate gains of the broad market indexes, with the S&P 500 up 3.85% for the quarter relative to the DJI at 2.78%, the NASDAQ at 9.69%, and the Russell 1000 at 4.03%.

Third Quarter 2016 S&P 500 Returns
Source: Yahoo! Finance

This made third-quarter returns contingent on which firms had the best upmarket capture. Plans with more conservative asset allocation models saw the greatest challenges, and advancing equity markets lifted plans with more aggressive glidepaths.

  • T. Rowe Price saw the greatest gains in terms of their rank relative to their peers, with their namesake Alaska plan rocketing to a top-ten position over almost every trailing period (the plan ranked 11 over the 3-year period). The University of Alaska plan saw similar gains.
  • The USAA 529 College Savings Plan saw markedly improved returns in the most recent trailing one-year period. In fact, the plan broke the top-ten in the trailing ten-year period.
  • While not yet in the top ten, every Fidelity plan made notable advances in their relative 5-year rankings versus their peers over last quarter, as some challenging performance from the 2011 calendar year falling off.

You can find the full performance rankings here.

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. Also remember that past performance is not necessarily an indicator of future returns.

Top performing 529 plans

For the most part those plans that have performed well continued to perform well. Two notable changes this quarter included the addition of a second period of top ten performance for Virginia inVEST and West Virginia SMART529 Direct plans. Both plans continue to reinforce their strong performance record.

3Q16 market commentary

The third quarter saw generally strong, steady growth across multiple indexes. However, the magnitude of gains varied widely depending on the index structure and sector composition. Most Information Technology indices made significant double-digit gains, while high-dividend stocks such as Utilities suffered as investors grew concerned over competition from fixed income security yields. The uneven returns are reflected in the disparate gains of the broad market indexes, with the S&P 500 up 3.85% for the quarter relative to the DJI at 2.78%, the NASDAQ at 9.69%, and the Russell 1000 at 4.03%.

Third Quarter 2016 S&P 500 Returns
Source: Yahoo! Finance

This made third-quarter returns contingent on which firms had the best upmarket capture. Plans with more conservative asset allocation models saw the greatest challenges, and advancing equity markets lifted plans with more aggressive glidepaths.

  • T. Rowe Price saw the greatest gains in terms of their rank relative to their peers, with their namesake Alaska plan rocketing to a top-ten position over almost every trailing period (the plan ranked 11 over the 3-year period). The University of Alaska plan saw similar gains.
  • The USAA 529 College Savings Plan saw markedly improved returns in the most recent trailing one-year period. In fact, the plan broke the top-ten in the trailing ten-year period.
  • While not yet in the top ten, every Fidelity plan made notable advances in their relative 5-year rankings versus their peers over last quarter, as some challenging performance from the 2011 calendar year falling off.

You can find the full performance rankings here.

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