By Denise Ross

South Dakota’s sanctioned 529 college savings vehicle, run by Allianz, gets high marks from MorningStar, which has released rankings for the nation’s 529 plans.

Says MorningStar:

This plan … has plenty of appeal. Investors are charged just for the underlying funds, which in most cases are in the form of reasonable-priced institutional share classes. Plus, South Dakota is currently capping the fees of its direct-sold option at a cheap 0.65% (this fee ceiling can be removed at any time). Although dull, the fee advantage is an important consideration, since expenses come directly out of investors’ returns. In terms of quality, there are a few weak links in the line-up, but most of the underlying funds are strong performers. We’re also pleased with the ample flexibility offered, since investors can also choose one or more of many different individual mutual funds. Our one complaint regards the age-based track, which may be a bit conservative for the more aggressive set. However, that concern aside, South Dakota investors have a great choice here.

“Choice” might not be the best word, as this fund is the only 529 option available in South Dakota, whereas most (but not all) other states have a menu of plans from which to choose.

Also of note, South Dakota’s plan has 59 % of its funds rated at 4 or 5 stars - not as good as North Dakota’s 100 % but much better than a Nebraska plan with 0 %.

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