Morningstar rates CollegeBound poorly for 4th year in a row
IN A REPORT RELEASED Tuesday, analysts of Chicago investment firm Morningstar negatively rated Rhode Island's CollegeBoundfund for the fourth year in a row, citing the poor performance of the fund's investments from managing firm AllianceBernstein.
PROVIDENCE – Rhode Island’s CollegeBoundfund, the college savings plan managed by New York-based AllianceBernstein, has received a negative rating from Morningstar analysts for the fourth consecutive year, the Chicago-based investment research firm reported Tuesday.
The annual rating of 64 of the country’s largest 529 college savings plans represents approximately 98 percent of the more than $181 billion in U.S. 529 plan assets, Morningstar said. A negative rating indicates that a plan’s investment options suffer at least one major flaw that Morningstar analysts believe will likely hinder future performance.
According to the 2013 report, CollegeBoundfund’s investments from AllianceBernstein have struggled in terms of performance. Rhode Island’s 529 plan joined Minnesota’s College Savings Plan and Kansas’ Schwab 529 College Savings Plan with negative ratings for 2013.
In determining a plan’s rating, Morningstar’s fund analysts consider five factors: its strategy and investment process, its risk-adjusted performance, an assessment of its manager, the stewardship practices of its administration and parent firm, and whether its investment options are a good value proposition compared to its peers. Analysts then assign forward-looking ratings of gold, silver, bronze, neutral or negative to each plan.
The country’s top gold-rated college savings plans in 2013 were Alaska’s T. Rowe Price College Savings Plan, Maryland’s College Investment Plan, Nevada’s The Vanguard 529 Savings Plan and the Utah Educational Savings Plan.