It always comes back to performance.

Over the course of the last couple of years, mutual fund firms have launched numerous 529 college savings plans in conjunction with states throughout the country. With virtually every plan announcement has come an explanation of the overall tax advantages of 529 plans compared to other college savings vehicles.

But now, with more than 50 of these plans available in the market, the industry is moving past the education phase of the 529 product. Investors and advisers alike have moved from asking, "Why 529s?" to "Why this 529?" and the market is beginning to respond.

Morningstar of Chicago is working on a plan to offer retail investors and investment advisers an examination and comparison of the underlying investments within 529 plans. The firm expects to come out with the new service this fall, according to Tricia Rothschild, senior product manager at Morningstar.

The plan is to list the investments within each 529 plan and include Morningstar's existing fund information, performance history and analysis so that investors will have the opportunity to compare plans in a meaningful way.

"More and more advisers and investors are [familiar] with the 529 product and know its advantages. Now they're seeking information about past performance and analysis." said Chris Stack, a managing consultant for Saving For College Educational Services, an affiliate of of Pittsford, N.Y.

SavingForCollege.Com currently rates 529 plans by their "usefulness," a subjective measure incorporating the plans' contribution limits and tax advantages. Like Morningstar, the firm has announced that it will begin reporting 529 investment performance in 2002.

Because of the varying structures of 529s, it can be tricky to offer an apples-to-apples comparison of the plan investments. In addition to its standard investment data, Morningstar will provide a 529 calculator that incorporates the wide array of tax laws that affect plans from state to state. Investors will be able to compare the after-tax performance of one of their in-state plans, which typically offer greater tax advantages, to the after-tax performance of out-of-state plans, Rothschild said.

The firm will also provide a tool, similar to the one that it provides for 401(k) participants, that allows investors to plug in individualized asset allocations to examine the diversification and performance of their portfolios.

The fact that more data is being requested and will soon be available is good news for the 529 industry, as long as Morningstar is able to offer a standardized method of reporting, said Sandra Forcier, director of marketing for Schoolhouse Capital of Boston. Schoolhouse, the education savings subsidiary that State Street Global Advisors created in 2000, serves as the program manager for New Mexico's 529 plan.

Reports that Morningstar is planning to apply a rating system to 529s are wrong, according to Rothschild. The firm will not use its star ratings or any system to rank the plans overall. However, for the underlying investments that Morningstar already rates, which includes the majority of funds in 529s, the firm will include those ratings when displaying information about those underlying investments. But the firm is hesitant to rank plans or to give them an overall grade.

"The reason is that, with the overall 529 industry being so young and just beginning to evolve, it seems premature for us to be rating the different plans," Rothschild said.

The firm has not decided yet if or to what extent it will charge a fee for the 529 information. The firm's retail investor and adviser sites offer a free area and a premium area. There are several possibilities for how that will be done with 529s, depending on the depth of the data provided, Rothschild said.

Now that there are more than 50 529 plans available, competition for investor assets is increasing. As with other investments, performance will be a major differentiating factor.

"At the end of the day, 529s are investment vehicles like any other," Forcier said. "While there are tax advantages in 529s, investors want to hear about performance. If Morningstar has developed a good way to provide that, we're in favor of it."

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