ABLE Program Performance (2016 – 2022)

As we end 2022 we take the opportunity to evaluate each ABLE program’s performance. The market was down for the year so ABLE account investments will follow that trend as well.

The Leading ABLE Programs from Past Performance (2016 – 2022)

Lets get straight to the results. You can read further if you want the details of my evaluation and how I got to the conclusions that are here.

I titled this section the leading ABLE programs, with an “S” because the leading program is only available to residents of Tennessee. All other ABLE programs in this chart are available for any resident from any state. The 2nd leading ABLE program for investment performance is the Massachusetts’s ABLE program, which is managed by Fidelity.

Included in this summary table, are returns for the S&P500 index and a simple 60% stock and 40% bond portfolio, over the same time period, for comparison.

Top ABLE Program Returns (2016-2022 Aggressive Option) for 8 Out of State Programs and Tennessee

How Each ABLE Program’s Performance is Evaluated

See “How to Select a State ABLE Program (Part 2) – Top 5 Deciding Features” if you want to know why I focus on each ABLE program’s performance. I believe that the ABLE program’s performance of its underlying investment funds is the most important feature of an ABLE program (coupled with the opportunity to get a state income tax credit/deduction – if your state offers it).

The most significant difference between state ABLE programs is how fast the ABLE account can grow from the invested funds and if a state tax deduction/credit is offered by the state in which you live when contributing to an ABLE account. The state tax deduction/credit would need to be significant enough to make it worthwhile staying enrolled in your home state ABLE program versus enrolling in another state’s ABLE fund that offered superior investment performance.

Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principle. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position investment objectives and risk profile before making any investment decision.

A secondary purpose for why we put funds into an ABLE account for our child is to invest their funds for the long term. See “The #1 Reason to Have an ABLE Account” for why someone needs an ABLE account .

To evaluate each ABLE program’s investment performance, I extracted from each ABLE program’s disclosure document the funds that they offer for their most aggressive investment option within the ABLE account. Each ABLE program usually invest a percentage of several funds within their aggressive type investment. The ticker from each of these funds, along with their percentages are evaluated by Portfolio Visualizer to see what the reported return would be for an initial investment of $10,000 in January 2016 through to the end of 2022. Portfolio Visualizer returns the value of what that initial $10,000 investment would grow to and the compound annual growth rate (CAGR) would be over that time period. Other settings within Portfolio Visualizer include that dividends are getting reinvested in these ABLE accounts and that the funds are rebalanced at least annually.

The results may not be exact, because of some additional ABLE account fees that are in each state’s ABLE program, but the results should be close enough to make a valid comparison between the performance of the underlying investment choices within each ABLE program. A quarterly fee of $11.25, within an ABLE account from one ABLE program, will not have a significant effect on annual returns when compared with other ABLE programs that may not have an account maintenance fee – at least for an example balance of $10,000.

Some ABLE programs have chosen mutual funds with higher than expected expense ratios – which are fees that are within the investment funds. These higher expense ratios, however, should be included into the overall performance that are reported by Portfolio Visualizer.

Every ABLE Program’s most Aggressive Investment Fund(s) Performance Return (2016 – 2022)

Click on each column header to sort the table by that column’s attributes. For example, click on “Final Value” to sort all rows by the largest or smallest final balance of each ABLE program.

Included in this summary table, are returns for the S&P500 index and a simple 60% stock and 40% bond portfolio.

The first 8 state ABLE programs listed are the unique programs available to all US residents. They are sorted in alphabetical order in the table.

The North Carolina plan was picked to represent the “National ABLE Alliance“.
Ohio represents “STABLE “. The other states that use the STABLE program are called “Partner States”. The partner states do not accept non-residents into their programs, but Ohio does.
Oregon represents the “Collaboration” states, which is another group of states that use the same investments and plan.

If you click on the “Group” column you will see which state programs are associated with each other or if the program is a stand alone program. There are various footnotes below the table that address some of the ABLE programs.

ABLE Program Aggressive Return (2016-2022)

(A) Virginia ABLEnow offers the same fund as Ohio and others – VASGX
(B) Louisiana offers the same fund as Ohio and others – VASGX
(C) Maine has no investment choices. They only offer a bank account.
(D) Tennessee offers the Total Stock Market Fund (VITSX) by itself so investments can be the most aggressive with 100% stock, unlike all other programs.
(E) Virginia ABLEAmerica is sold by financial planners and includes front end loaded funds which makes it impossible to calculate returns. Front end loaded funds are fees that an investor pays before the investor’s money gets invested, thus decreasing the amount of money that goes directly to the investment firm and does not get invested.
(F) Washington state’s program disclosure document has incorrect values for the percentage of investments within the aggressive investment category (as of this evaluation).

According to Portfolio Visualizer the Tennessee ABLE program’s most aggressive fund choice is still the highest performance over the last number of years (2016-2022), followed by Massachusetts, then New York (which just opened their ABLE program to non-residents), then California, then Nebraska and then North Carolina ABLE program, which is the same for any of the other 18 ABLE programs that make up the National ABLE Alliance.

The Tennessee ABLE program was able to outpace other programs over this time frame by offering funds that can be 100% invested in stock mutual funds. The most aggressive investment options offered by most all of the other ABLE state programs include some percentage of bonds, which does reduce risk when compared with being invested in 100% stock, but may also reduce potential growth. There is risk in choosing any type of investing.

The Tennessee ABLE program is only available to residents of Tennessee while the Massachusetts plan is open to any state resident.

As a reminder, you will want to see if your own home state offers a tax deduction/credit from your state income taxes if you contribute to an ABLE account that is inside or outside of your home state. You can also evaluate how the deduction/credit compares with the increased performance that you can get by investing with the Massachusetts’s plan, or the Tennessee plan if you are a resident of Tennessee.

What do you think of these performance numbers? How does your ABLE account performance compare with these calculated results? Are you invested in the most aggressive funds or do you have a less risk approach to investing because you may have more short term goals that you are trying to meet? Comment below.