College savings plans continue to grow in both assets and investment options, according to new research released Thursday by Morningstar.
The annual study looked at 84 plans with nearly $200 billion in assets as of Dec. 31, and found a 20% increase from 2012, despite a maturing market. In 2012, plan assets grew 25% from the previous year.
Kathryn Spica, Morningstar senior analyst for fund-of-funds strategies, said that diversified investment options “continue to gain traction” among investors, with the most new asset flows going to offerings diversified among stocks, bonds and cash.
The average age-based glidepath has less equity exposure at the early stage and slightly more in the middle years, Morningstar found.
In 2013, plans sold directly and through advisers saw roughly even growth, compared to previous years where direct-sold plans saw faster growth.
The study is available on Morningstar's website. Morningstar also publishes a 529 analyst ratings report in the fall.
Michael Conrath, 529 program director at J.P. Morgan Asset Management, said his firm's 529 business is experiencing strong growth for several reasons, including continued tuition increases and the fact that many high-income people don't have specific college savings plans. “It's not about saving for college, it's about investing for college,” Mr. Conrath said. “We are out there actively talking with clients every day.”
