Like I said earlier, I didn't mean to start a debate regarding who is better, but it looks as though all the American sheep have come out to play.
First off, I'm not talking about mutual fund performance, but rather 529 performance. This is important because you are not getting the full American performance because VA has tacked on an extra layer of expense in their 529 plan that takes away from their performance.
Regardless, their 529 performance does not come close to competitors... not to mention the added work to manage their portfolios and rebalancing once per year, which for the amount of assets that are in most of these accounts (maybe $10,000 average on the high end), is probably a waste of time and money.
Also, we know that about 90% of a portfolios outperformance comes not from the underlying portfolio holdings, but rather from the mix of asset classes that you have an actively managing that allocation (I believe someone at Ibbotson Association won a Nobel Prize for this). However, if we do want to talk about underlying mutual fund performance, there certainly are other families that outperform their indexes over long periods. Someone had mentioned AllianceBernstein. Both the Alliance growth portfolios and the Bernstein value portfolios outperform their respective indexes over the long term. In fact, out of all the equity portfolios that they manage in their 529 plan, only the REIT portfolio underperforms since inception (only by around 30 bps), and that only makes up a maximum of 10% of their portfolios anyway.
Alliance and Bernstein have had superior performance, they have industry-known portfolio construction models, and their research is second to none in the industry. In fact, 90% of all the money managers that all of you use probably buy their research to manage their portfolios... except of course, the index options that simply buy off a list of stocks that happen to be on the list that day. Finacnial News Online just had AllianceBernstein named as Equity Manager of the Year in a Nov 7th article.
American is not the end-all to investment decisions. For those that jumped all over me for making an observation of their 529 flows and the puzzling reasons behind them, do the homework that you claim to do instead of simply choosing American and finding ways to justify your decision. You can not seriously believe that they have a superior product.
Plus, for the more substantial assets where gift and estate planning is involved, you must close the accounts or change beneficiaries around because they have time limits on their accounts. More and more items that point to other products' increased flexibilty. But... they're American, so who cares, right? It's the easy sell to a client.