A report released today by Morningstar that evaluates 529 college savings plans shows that while investors continue to invest in these plans, their performance lags that of similar mutual funds.

The Chicago-based financial research firm looked at all 86 U.S. college savings plans currently on the market and found that total assets under management grew 25 percent, to more than $166 billion, as of year-end 2012.

However, traditional open-end mutual funds have outperformed 529 plans over the past five years. Age-based 529 options also have trailed their benchmarks, according to the study. Higher expenses are likely to blame for much of the performance shortfall, as 529 plans have extra layers of expenses that can bump their total expense ratio 20 to 30 basis points higher than fees for similar mutual fund offerings.

Despite having higher expense ratios than open-end funds, 529 plan investment options have steadily lowered their fees. In all Morningstar 529 categories, average total expense ratios are lower in 2013 than they were in 2011.

Direct-sold 529 plans continue to gain market share at the expense of advisor-sold plans, a trend that may reflect the rise of independent, fee-only advisors, who typically aren’t paid on commission and may be more likely than an affiliated advisor to direct client assets toward a cheaper direct-sold plan, according to Morningstar.

Virginia’s 529 plans have the most assets under management by a wide margin—more than $37.5 billion. New York’s plans, the second-largest, have more than $14 billion in assets under management.

“Closed architecture” plans, which include investment options from a single provider, have outperformed “open architecture” plans, which include investment options from a number of providers, on a risk-adjusted basis over the long term, according to Morningstar. The closed architecture plans also had lower expenses.

Morningstar analysts evaluated numerous factors such as asset flows by category, assets by state, investment process, plan structure, performance, and price and management. The study is available at: http://global.morningstar.com/529Landscape2013.