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-year investment performance, three-year investment performance, five-year investment performance and ten-year investment performance.
The top-performing 529 plans
In producing our rankings, we compared the reported investment performance of a subset of portfolios from each 529 savings plan. The ‘performance score’ determines the ranking. For more details, please view our methodology.
Here is the top 10 529 performance rankings as of November 20, 2020 based on 3-year performance, plus the full list of rankings:
10. North Carolina
Performance Score: 31.98
North Carolina’s NC 529 Plan features Vanguard funds in its age-based and static options, and a federally-insured deposit option through the State Employees Credit Union.
Performance Score: 31.80
The investment menu in Ohio’s 529 Plan, CollegeAdvantage, features 3 age-based options and 5 risk-based options using Vanguard funds, a college enrollment-based option and 13 static investment options using Vanguard and DFA funds, and 2 types of FDIC-insured deposit accounts through Fifth Third Bank, National Association. Accounts can be linked to the Upromise rewards service.
Performance Score: 28.49
The team of Ascensus Broker Dealer Services, Inc. and The Vanguard Group manages the Colorado Direct Portfolio College Savings Plan. It features age-based and static portfolio options utilizing Vanguard mutual funds. Accounts can be linked to the Upromise rewards service.
Performance Score: 27.95
College Savings Iowa is a direct-sold 529 college savings plan available to residents of any state offering low fees and 14 investment options from Vanguard. Iowa residents may enjoy a state tax deduction for contributions to the plan.
Performance Score: 27.83
Pennsylvania’s 529 Investment Plan is available to residents of any state, and offers 15 Vanguard investment options, including a socially responsible equity portfolio. Pennsylvania residents may enjoy a state tax deduction for contributions to the plan.
Performance Score: 26.99
The Vanguard 529 College Savings Plan, offered by Nevada, is available to residents of any state, and offers low costs, experience and easy-to-manage savings options.
Performance Score: 26.68
The START Saving Program requires Louisiana residency to participate. It is subsidized by the state, resulting in no costs to the participant above the underlying fund costs. Vanguard funds and the State Treasurer’s fixed income fund are utilized in the age-based and static portfolio options. Louisiana has established a separate program for K-12 savings, the Louisiana Student Tuition Assistance and Revenue Trust Kindergarten Through Grade Twelve Program, or START K12.
3. West Virginia
Performance Score: 25.91
The West Virginia SMART529 WV Direct College Savings Plan, available on a direct basis to those who meet certain West Virginia residency requirements, features a menu of age-based and static portfolio options utilizing index funds from Vanguard as well as an Invesco stable value portfolio option.
2. New York
Performance Score: 23.81
New York’s direct-sold 529 college savings plan is available to residents of any state. It offers low fees and diverse investment options featuring Vanguard mutual funds. New York residents may enjoy a state tax deduction for contributions to the plan.
Performance Score: 21.72
In September 2008, Upromise Investments, Inc., which was acquired by Ascensus College Savings in 2013, took over the management of the Indiana CollegeChoice 529 Direct Savings Plan from JPMorgan, and it now features a year of enrollment option using Vanguard index and Loomis Sayles funds, seven individual portfolios using a variety of investment managers, and an FDIC-insured savings account from NexBank. Accounts can be linked to the Upromise Rewards service.
Next: How we rank 529 plan performance + the full list
How to rank 529 plan performance
Ranking over 3,000 investment options is no easy task, considering the wide variety of options found in 529 savings plans, and it requires a special methodology.
Step one: We select specific portfolios from each 529 plan that can be compared on an apples-to-apples basis to portfolios in other 529 plans, based on their allocation among stocks, bonds and short-term instruments (money market and guaranteed investments). We’ve set up seven different asset-allocation categories ranging from 100 percent equity to 100 percent short-term.
Step two: Within each of the seven categories, we compare historical performance of the selected portfolios and assign each plan a percentile ranking between one (best) and 100 (worst). Separate rankings are developed for one-year, three-year, five-year and ten-year performances.
Step three: We take the average of each 529 plan’s percentile rankings in the seven asset-allocation categories to produce a combined or ‘composite’ percentile ranking. We then produce reports showing how the 529 plans rank against each other in their composite percentile rankings. Note: We currently produce these composite rankings for one-year, three-year, five-year and ten-year performances.
For a more in-depth explanation of our methodology, please read our white paper.
Links to our full report on the composite rankings for this quarter are provided below for the direct-sold 529 plans. Only our Premium subscribers have access to composite rankings for advisor-sold 529 plans, to the underlying data supporting the rankings and to separate one-year, three-year, five-year and ten-year rankings for each of the seven different asset-allocation categories. In addition, subscribers can easily look up the historical performance for every 529 portfolio in every available share class by using our Fee and Performance Lookup Tool.
At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.