Assets held in 529 college savings plans increased 16.7% last year as the largest state plans continued to attract the bulk of the assets.
Last year, college savings plan reached an estimated $168.5 billion, up from $144.4 billion a year earlier. According to Boston-based researcher Financial Research Corp., estimated 529 net inflows were over $3.1 billion in the fourth quarter, the highest level since the first quarter of 2011.
Net inflows of 529 plans reflect investor contributions and education-related distributions as well as market-based appreciation. In the third quarter, flows were negative as these plans were tapped to pay college bill. Thus, FRC concluded that the data show year-over-year all-time highs in assets under management and investor usage of 529 plans, indicating that investor interest in 529 plans continues to rise.
Drilling down into the FRC report, Virginias College America plan, from American Funds, continues to dominate with $35.4 billion in assets, up 17.5% from a year earlier. The plan controls 21.0% marketshare. New Yorks direct-sold plan, distributed by Vanguard and administered by Upromise Investments, was a distant second with a 7.1% market share.
Most of the 529 plans on the FRC Top 10 list are direct-sold. Other broker-sold plans on that list, besides the Virginia entry, include Rhode Islands CollegeBoundfund and Maines NextGen College Investing Plan (both of which have an advisor-sold version) as well as Ohios BlackRock College Advantage 529 Plan. The market shares of these three plans ranged from 4.3% to 2.3%, and all lagged the overall 529 market in their rate of 2012 asset growth.
Upromise, which administers 529 plans in multiple states, is close behind American Funds with a total market share of 20.2%, according to FRC. Last year, Upromise 529 plans increased assets by 19.7%. Upromise provides direct-sold, advisor-sold, and employer-offered 529 college savings plans.