9 February 2005
Apples with Apples - CorporateSuper Ratings for 2005
Today Chant West released its CorporateSuper Ratings for 2005. Chant West principal, Warren Chant, says: “With the introduction of fund choice in July, it is essential that fund members have access to independent ratings that tell them how the fund they are in - or the fund they are considering - stacks up.
“They need to be able to distinguish clearly between wholesale funds, which most of them are in now, and retail funds, which are what they are most likely to be offered as an alternative. “We research and rate both types of fund. Our CorporateSuper Ratings, which we’re releasing today, cover the wholesale market. In the coming months we’ll also be publishing our PersonalSuper Ratings that cover the retail market.
“Currently about 70% of the Australian workforce is in a wholesale fund. In many cases these are ‘public offer’ industry funds and corporate master trusts. These are the funds we rate, and they generally offer good value for money. The problem is that most fund members don’t realise how good a deal they’re already getting.
“Our ratings will help them, and their employers, understand the quality of their fund relative to others. They’re useful for members, and they’re also useful for employers who may need to choose a default fund or check on the standing of their current default fund.”
The apples tell the story
Within the wholesale market, Chant West rates funds according to the market segments they service, that is:
|Small Plans||Less than $10 million|
|Medium Plans||$10m to $50 million|
|Large Plans||More than $50 million|
Within those segments, ratings are awarded in the range of 1 Apple, the lowest, to 5 Apples, the highest, compared with industry best practice. Chant says: “The use of apples is our way of reminding people that good research is all about comparing like with like – apples with apples.”
|Highest quality fund|
|High quality fund|
|Sound quality fund|
|Low quality fund|
|Lowest quality fund|
Chant West assesses all funds on seven criteria that are weighted according to their relative importance. Those criteria, and their weightings (in brackets), are: organisational strength (10%), investments (40%), fees (15%), insurance (10%), administration (10%), member services (10%) and employer services (5%).
Chant says: “We give the greatest weight to investments, and there we focus on the multimanager investment options as they apply to most members. We look in particular at the quality of the fund’s investment consultant as well as its internal resources.
“Investment beliefs and the quality of the people and investment process are far more important than past performance, which is a poor indicator of future performance. In fact, past performance counts for only 4% of our overall assessment.
“Another key aspect is our assessment of the fund’s administrator. Good administration is essential if a fund is going to deliver high quality employer and member services, and those will become increasingly important as choice of fund fuels more intense competition.”
Highest Quality Funds
For 2005, the funds awarded the top 5 Apple ratings according to the market segments they service are (in alphabetical order):
|Funds Rated 5 Apples – Highest Quality Funds|
|Large Plans||Medium Plans||Small Plans|
|Mercer Super Trust|
BT Lifetime Super
Mercer Super Trust
MLC Master Key Business
BT Lifetime Super
MLC Master Key Business
Navigator Super Solutions
Chant says: “In the large and medium plan markets, benefit designs are often quite complex and employers tend to be more demanding of the services they require. Master trusts have great experience in these areas, although two industry funds, Acumen and Sunsuper Corporate, have very strong competing products.
“For smaller plans, which are generally less complex, industry funds offer very competitive products. Six of the eleven funds rated 5 Apples are industry funds.”
About Chant West
Chant West is an independent consultancy that provides research to the superannuation industry and outsourcing advice to employers and trustees.
The firm has acted as consultant to AMP, BHP, Boral, Coles Myer, First State Super, IBM, Johnson & Johnson, Leighton, OneSteel, Orica, St George, Thiess, Westpac Staff Super, WMC, WorkCover NSW and Xstrata, and to many smaller organisations.
© Chant West Pty Limited (ABN 75 077 595 316) 1997 - 2013. You may only use this document for your own personal, non-commercial use. This document may not be copied, reproduced, scanned or embodied in any other document or distributed to another party unless you have obtained the prior written consent of Chant West to do so.
The information above is based on data supplied by third parties. While such data is believed to be accurate, Chant West does not accept responsibility for any inaccuracy in such data. Past performance is not a reliable indicator of future performance. The products, reports and ratings do not contain all of the information that is required in order to evaluate the nominated service providers, and you are responsible for obtaining such further information.
This information does not constitute financial product advice. However, to the extent that this document may be considered to be general financial product advice then you acknowledge that you have been provided with a Financial Services Guide
and Chant West warns that: (a) Chant West has not considered any individual person’s objectives, financial situation or particular needs; (b) individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation; and (c) individuals should obtain a Product Disclosure Statement from the relevant fund provider before making any decision about whether to acquire a financial product from that fund provider.