Fund ratings released for 2010
Chant West has released its 2010 fund ratings, and once again the not-for-profit sector dominates the list of top-rated funds. This is despite the fact that, in 2009, master trusts outperformed industry funds for the first time in four years.
“While investment is very important and accounts for 40% of our overall weighting, past performance only counts for 10% of that,” says Chant West principal, Warren Chant. “We don’t rate funds higher or lower just on the basis of one year’s performance. Otherwise we’d have downgraded a lot of master trusts when they performed relatively poorly in 2008, and then upgraded them based on last year’s performance. It doesn’t work like that. What we look for is the quality of their investment philosophy, process and people, including their in-house resources and external asset consultants. That doesn’t necessarily change just because markets move against you in the short term.”
The reason for not-for-profit funds achieving higher ratings is to be found in their overall value proposition, Chant says. “The better industry funds have relatively low administration fees, excellent investment processes, low cost insurance and an increasing range of member services, including some excellent member education. It’s the total package they offer that results in them scoring highly.”
The Top 10 personal super products are listed alphabetically in Table 1
. The only addition to last year’s Top 10 is Colonial First State, with its FirstChoice Wholesale product. It is the only commercial master trust in a Top 10 dominated by not-for-profit funds.
|TABLE 1: TOP 10 RATED PERSONAL SUPER FUNDS (listed alphabetically) |
|Colonial First State FirstChoice Wholesale |
|First State Super|
|NGS Super |
Table 2 shows the leading funds for medium-sized corporate plans, again listed alphabetically. We only show the Top six funds, as the universe of funds in this category is much smaller than for personal funds. AustralianSuper and Sunsuper are the sole representatives from the not-for-profit sector, which is still struggling to make serious inroads in the larger corporate super market.
|TABLE 2: TOP RATED FUNDS FOR MEDIUM-SIZED CORPORATE PLANS (listed alphabetically) |
Looking purely at investments, NGS Super comes into our Top 10 for 2010. The list in Table 3 shows that we still have high regard for the quality of the investment offerings of many industry funds.
Chant says: “While they suffered in performance terms in 2009 due to the downward revaluation of some of their unlisted assets and their lower exposure to the resurgent listed share and property markets, they are still well positioned and well structured to produce good risk/return outcomes for their members in the future.”
|TABLE 3: TOP 10 RATED FUNDS FOR INVESTMENT (listed alphabetically) |
|First State Super |
|NGS Super |
Pensions products now almost universal
Over the past year, several funds have introduced their own pension products where previously they either had no product or else badged a generic product. “Pretty much all the major funds now have their own pension offerings – even a fund like Hostplus that has a large majority of young members. It’s a recognition that super can be and should be a ‘cradle to grave’ product, and your relationship with your fund doesn’t stop when you retire,” Chant says.
“One issue to watch out for with pensions is whether the fund you’re in is going to charge you higher fees when you move from the super division to the pension division. The better ones don’t, but in some cases the jump in fees is enough to have you looking for a different fund.”
In the pension category, NGS Super again comes into the Top 10 listing as shown in Table 4.
|TABLE 4: TOP 10 RATED PENSION FUNDS (listed alphabetically) |
|CFS FirstChoice Wholesale |
|First State Super |
|MLC MasterKey Fundamentals|
|NGS Super |
|Russell Private Active Pension |
Insurance and service upgrades
One noticeable trend in recent times has been for funds to upgrade their insurance benefits and/or reduce their insurance premiums. Some that have done so are AGEST, Asset, Auscoal, Media Super, REST and Tasplan, while AustralianSuper is due to roll out its upgrade in May. The insurance offerings in these funds, in particular AustralianSuper and REST, are some of the largest group insurance contracts in the world and this scale has enabled funds to secure very competitive premiums and terms for their members.
Some funds have also improved the scope and standard of their member services, most notably in the areas of education and advice. Chant says: “A few of them have lifted their game, but there are still a lot of funds that could be doing much better in those areas. It’s so important, and it’s something that can really make a difference to a member’s retirement income.”
There are some stand-out performers in communication and education services. Russell’s member statement continues to lead the way in producing annual statements which are clear, engaging and personalised. Sunsuper’s OnTrack program, and in particular its excellent Statement of Advice, has set the benchmark for funds and advisers in communicating the impact of proposed superannuation strategies to members. Finally, NGS Super’s NGS College is a creative breath of fresh air, allowing members to explore superannuation options through an interactive, engaging and fun website.
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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.