Bright Start Earns Elite Gold Rating From Morningstar!
Illinois’ Bright Start Direct-Sold College Savings Program stands out as a topnotch plan following a complete overhaul in July 2017. At that time, the state replaced program manager Oppenheimer Funds with Union Bank & Trust and revamped the investment lineup. The state also made additional fee cuts. The new look and lower cost raises the plan’s Morningstar Analyst Rating to Gold from Bronze. — Morningstar October 2017
October 24, 2017 – Morningstar, a leading provider of independent investment research, announced new Analyst Ratings and reports for 62 of the nation’s largest 529 college-savings plans. In 2017, Morningstar identified 34 plans that it believes to be best-in-class options, assigning these programs Analyst Ratings of Gold, Silver, and Bronze. These plans, for the most part, follow industry best practices, offering some combination of the following attractive features: a strong set of underlying investments; a solid manager selection process; a well-researched, asset-allocation approach; an appropriate set of investment options to meet investor needs; low fees; and strong oversight from the state and program manager. These features improve the odds that the plan will continue to represent a strong option for investors. Gold-rated plans have all or a vast majority of these attributes. Silver- and Bronze-rated plans embody most of these qualities but often have some room for improvement.
Since 2012, ratings for 529 plans use the same scale as the Morningstar Analyst Rating for mutual funds. Both Analyst Rating methodologies consider the same five factors to arrive at the final rating, though the 529 ratings reflect the quality of the entire plan–not a single investment, as is the case for the fund rating.
To arrive at an Analyst Rating for 529 plans, analysts consider: Process, People, Parent, Performance, Price. Morningstar rates the five Pillars: Positive, Neutral, or Negative. While these ratings can help with the selection process, they should not be the only factor considered.
Bright Start Morningstar Pillar Ratings
- Process: Did the plan hire an experienced asset allocator to design a thoughtful, well-diversified glide path for the age-based portfolios? What suite of investment options is offered?
- People: What is Morningstar’s assessment of the underlying money managers’ talent, tenure, and resources?
- Parent: Is the program manager a good caretaker of college savers’ capital? Is the state managing the plan professionally?
- Performance: Have the plan’s options earned their keep with solid, risk-adjusted returns over relevant time periods? How is the plan expected to perform going forward?
- Price: Are the investment options a good value?
Process — Positive
People — Positive
Parent — Neutral
Performance — Neutral
Price — Positive
The Morningstar Analyst RatingTM is not a credit or risk rating. It is a subjective evaluation performed by Morningstar’s manager research group, which consists of various Morningstar, Inc. subsidiaries (“Manager Research Group”). In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission. The Manager Research Group evaluates funds based on five key pillars, which are process, performance, people, parent, and price. The Manager Research Group uses this five pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark, or in the case of exchange-traded funds and index mutual funds, a relevant peer group, over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weight of each pillar may vary. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s conviction in a fund’s prospects for outperformance. Analyst Ratings ultimately reflect the Manager Research Group’s overall assessment, are overseen by an Analyst Rating Committee, and are continuously monitored and reevaluated at least every 14 months.
For more detailed information about Morningstar’s Analyst Rating, including its methodology, please go to global.morningstar.com/managerdisclosures/
The Morningstar Analyst Rating (i) should not be used as the sole basis in evaluating a fund, (ii) involves unknown risks and uncertainties which may cause Analyst expectations not to occur or to differ significantly from what they expected, and (iii) should not be considered an offer or solicitation to buy or sell the fund.