Lonsec and SuperRatings are pleased to announce the nominations for this year’s Lonsec and SuperRatings Fund of the Year Awards. With 18 categories, the awards emphasise Lonsec and SuperRatings’ commitment to recognising the best providers across the managed fund and superannuation sectors.

Lonsec CEO, Mike Wright, comments, ‘As the pandemic has posed ongoing challenges across investment markets and operating environments, it is important that we recognise the contributions of strong funds that are helping their clients and members navigate this uncertainty.’

For the first time, Lonsec will present a full suite of nine managed fund awards, including an overall Lonsec Manager of the Year. Lorraine Robinson, Executive Director of Lonsec Research explains, ‘In previous years, the SuperRatings Awards have been a much-anticipated event and we decided it’s time that Lonsec Research further recognised the outstanding contributors to the managed fund market.’

This year’s awards will be the nineteenth for SuperRatings, recognising the best superannuation funds. Kirby Rappell, Executive Director of SuperRatings comments, ‘It is an honour to continue to recognise the best in the superannuation sector and award those funds who, in the last year, have helped their members to navigate a very difficult time. While this year’s event will be held virtually, the awards continue to be very real.’

An overall SuperRatings Fund of the Year winner will also be announced on the day. The full list of nominees for all categories is available at the bottom of this release.

The awards will be held at 3.00pm on Thursday, 28 October in a 1.5-hour online session to be enjoyed from the comfort of your home or office. As part of the awards program, Lonsec and SuperRatings will host a panel session, On the Road to Net Zero by 2050, to discuss the strategic considerations associated with the rising adoption of net zero by 2050 by companies and governments and what this means for investment portfolios.

The nominations for the Lonsec awards are:

Lonsec Manager of the Year

Finalists

First Sentier Investors
Franklin Templeton
Pendal Group

Lonsec Multi-Asset Fund of the Year

Finalists

Atrium Evolution Series – Diversified Fund AEF 9
BlackRock Tactical Growth
Pinebridge Global Dynamic Asset Allocation Fund

Lonsec Active Equity Fund of the Year

Finalists

GQG Partners Emerging Markets Equity Fund – A Class
Hyperion Australian Growth Companies Fund
T. Rowe Price Global Equity Fund

Lonsec Passive Fund of the Year

Finalists

BetaShares Asia Technology Tigers ETF – ASX: ASIA
ETFS Physical Gold – ASX: GOLD
VanEck MSCI International Quality ETF – ASX: QUAL

Lonsec Active Fixed Income Fund of the Year

Finalists

Ardea Real Outcome Fund
Macquarie Income Opportunities Fund
Pendal Short Term Income Securities Fund

Lonsec Property and Infrastructure Fund of the Year

Finalists

Australian Unity Healthcare Property Trust
ClearBridge RARE Infrastructure Income Fund (Hedged)
Quay Global Real Estate Fund

Lonsec Alternatives Fund of the Year

Finalists

Hamilton Lane Global Private Assets Fund (AUD)
Man AHL Alpha
Partners Group Global Value Fund

Lonsec Emerging Manager of the Year

Finalists

Daintree Capital Management
Eiger Capital
Sage Capital

Lonsec Innovation Award

Finalists

iShares Core Corporate Bond ETF (ASX: ICOR)
Magellan FuturePay
Robeco SDG Credit Income Fund (AUD Hedged) – Class B

 

 

SuperRatings Fund of the Year Award

Announced on the day.

 

 

 

 

 

SuperRatings MySuper of the Year 

Awarded to the fund that has provided the Best Value for Money default offering.

Finalists
AustralianSuper
Aware Super
CareSuper
Cbus
Equip
HESTA
Hostplus
QSuper
Sunsuper
UniSuper

SuperRatings MyChoice Super of the Year

Awarded to the fund with the Best Value for Money Offering for engaged members.

Finalists
AustralianSuper
Aware Super
CareSuper
Equip
Hostplus
Mercer Super Trust
QSuper
Sunsuper
UniSuper
Vision Super

SuperRatings Pension of the Year

Awarded to the fund with the Best Value for Money pension offering.

Finalists
AustralianSuper
Aware Super
Cbus Super
HESTA
Hostplus
QSuper
Spirit Super
Sunsuper
TelstraSuper
UniSuper

SuperRatings Career Fund of the Year 

Awarded to the fund with the offering that is best tailored to its industry sector.

Finalists
Cbus Super
HESTA
Hostplus
Mercy Super
TelstraSuper
UniSuper

SuperRatings Momentum Award

Awarded to the fund that has demonstrated significant progress in executing key projects that will enhance its strategic positioning in coming years.

Finalists
Active Super
Cbus Super
CSC
Equip
Hostplus
TelstraSuper

SuperRatings Net Benefit Award

Awarded to the fund with the best Net Benefit outcomes delivered to members over the short and long term.

Finalists
AustralianSuper
CareSuper
Cbus Super
HESTA
Hostplus
UniSuper

SuperRatings Smooth Ride Award

Awarded to the fund that has best weathered the ups and downs of the market, while also delivering strong outcomes.

Finalists
Aware Super
BUSSQ
CareSuper
Cbus Super
HESTA
QSuper

SuperRatings Infinity Award

Awarded to the fund most committed to addressing its environmental and ethical responsibilities.

Finalists
Active Super
Australian Ethical Super
Aware Super
Christian Super
Future Super
HESTA

Release ends
For more information, contact:
Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395

August was another strong month for equity markets however some storm clouds have reappeared amidst the collapse of Evergrande, one of China’s biggest property developers, as the Chinese government sought to stem excessive borrowing leaving the heavily indebted company with over $400B in debt. The main concern is that the collapse may have a flow on effect on the Chinese property market, which has grown at an incredible rate, and ultimately impact the Chinese economy. We have seen some evidence of contagion reflected in high yield markets and other property markets such as Hong Kong. Markets are also watching what direction central banks will take on their asset purchases programs and whether they will seek to taper the programs and if so to what extent.

From an asset class perspective, we are still supportive of risk assets despite some of the risks mentioned earlier, as bonds, including government and corporate bonds, offer limited relative value in the current environment. However, we continue to see asset valuations rise notably in Australian equities. We continue to monitor valuations looking for opportunities to take profits where applicable.

We are also observing an increase in the dispersion in returns on an asset class, country and stock level. We believe that such an environment is increasingly supportive of an active approach to asset management. We also believe that ensuring that portfolios are diversified in their exposures will become more important in the coming 12 months. One of our main challenges is identifying diversifying assets in the current environment and Lonsec’s investment committees are working hard to identify appropriate assets.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

Lonsec is pleased to announce the launch of a managed accounts solution for advisers using the Colonial First State (CFS) platform.

12 year track record Active management
All underlying funds rated Recommended and Highly Recommended by Lonsec
Range of risk profiles No extra cost

Lonsec has provided model portfolios on the CFS platform for over 12 years, and these portfolios are now available for the first time as a managed account solution.

Backed by our award winning research and highly experienced Investment team, the Lonsec Active portfolios have a strong track record over the short, medium and long term.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

Lonsec is pleased to advise that we are supporting the Design and Distribution (DDO) process by making Target Market Determinations (TMDs) available via iRate®, for the funds that we rate. You will be able to access the TMDs within iRate® when the rules become effective on 5 October 2021.

As a Distributor, we are required by the Regulator to ensure products that are rated have a TMD in place. We are working with Product Issuers to collect the TMDs, however, it may take us some time to collect, check and provide all of them to our users. Issuers are not required to provide these until the implementation date of 5 October and we will make the TMDs available as soon as possible thereafter.

If we do not receive a TMD from an issuer prior to the 5 October deadline, we will need to place the product on Fund Watch until the TMD is received.  This is a regulated requirement of the new rules. We are working with Product Issuers to try to keep this to a minimum and will let you know which funds are placed on Fund Watch for DDO via a special section of the Daily Bulletin and when you log into iRate®.

We know that many groups rely on Lonsec’s high conviction research to support their Approved Product List (APL), we ask that you note that any Fund Watch associated with the DDO is likely to be short-term and reflects only the delay in receiving the TMD. Please share this information with all the advisers in your network. Any Fund Watch arising from other non-DDO related matters will continue to be communicated as normal.

We are committed to helping all our clients access the information they need to manage their clients’ portfolios, so if you have any further queries about our DDO obligations or how they may affect you, please contact your BDM or Client Services.

IMPORTANT NOTICE: This document is published by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No. 421445 (Lonsec). Please read the following before making any investment decision about any financial product mentioned in this document.
Disclosure as at the date of publication: Lonsec receives fees from fund managers or product issuers for researching their financial product(s) using comprehensive and objective criteria. Lonsec receives subscriptions for providing research content to subscribers including fund managers and product issuers. Lonsec receives fees for providing investment consulting advice to clients, which includes model portfolios, approved product lists and other advice. Lonsec’s fees are not linked to the product rating outcome or the inclusion of products in model portfolios, or in approved product lists. Lonsec and its representatives, Authorised Representatives and their respective associates may have positions in the financial product(s) mentioned in this document, which may change during the life of this document, but Lonsec considers such holdings not to be sufficiently material to compromise any recommendation or advice.
Warnings: Past performance is not a reliable indicator of future performance. The information contained in this document is obtained from various sources deemed to be reliable. It is not guaranteed as accurate or complete and should not be relied upon as such. Opinions expressed are subject to change. This document is but one tool to help make investment decisions. The changing character of markets requires constant analysis and may result in changes. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. It does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s).
Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness. If our advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Investment Statement or Product Disclosure Statement for each financial product before making any decision about whether to acquire a financial product. Where Lonsec’s research process relies upon the participation of the fund manager(s) or product issuer(s) and they are no longer an active participant in Lonsec’s research process, Lonsec reserves the right to withdraw the document at any time and discontinue future coverage of the financial product(s).
Disclaimer: This document is for the exclusive use of the person to whom it is provided by Lonsec and must not be used or relied upon by any other person. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by Lonsec. Financial conclusions, ratings and advice are reasonably held at the time of completion but subject to change without notice. Lonsec assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.
Copyright © 2021 Lonsec Research Pty Ltd (ABN 11 151 658 561, AFSL No. 421445) (Lonsec). This document is subject to copyright of Lonsec. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this document may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec.
This document may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.

The assessment of performance of superannuation funds has gained traction over the past month, with the release of the government’s first superannuation performance test findings. When deciding to switch funds, it is easy to be swayed by investment returns, but there are other considerations that are as important. SuperRatings CEO Kirby Rappell says ‘Superannuation is bigger than just returns. It’s a good idea to consider a variety of factors such as fees, investment choices and insurance when deciding whether a fund is right for you.’

SuperRatings suggests you consider fees and returns in tandem as focussing solely on fees may mean that you miss out on higher account balances if a fund invests in more costly assets to generate greater returns. You should also look at total fees, which include both administration and investment fees to make sure you are comparing like with like.

Another key thing to consider when comparing super funds is investment choice. Mr Rappell says ‘make sure the funds you’re considering have investment options that suit you. This can range from ensuring the fund has an investment option that suits the level of risk you’re comfortable with to checking if there are specialist investment options such as a socially responsible option.’

One of benefits of super for many is the insurance available via a fund. As with any insurance product, it is important to work out what you want covered, the level of cover you need and if that cover is available in your comparison funds. Fees and returns, investment choice and insurance coverage all should be considered when deciding to move super fund. We suggest using the tools and calculators offered by funds to see what meets your needs and the impact switching funds could have – particularly on your insurance cover.

To ensure you have access to sufficient information to drive the best retirement outcomes, we suggest contacting your superannuation fund to find out what advice services are available to you. If wish to find a financial adviser, the Government provides information on how to select a financial adviser through the MoneySmart website.

Looking at returns, SuperRatings has seen balances continue to grow in August. The typical balanced option returned an estimated 1.6% over the month and 18.2% over the year.  The typical growth option returned an estimated 1.9% for the month and the median capital stable option also increased 0.7% in the month.

Accumulation returns to August 2021

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 1.6% 18.2% 8.0% 8.6% 8.1% 9.0%
SR50 Capital Stable (20-40) Index 0.7% 7.8% 4.6% 4.6% 4.8% 5.5%
SR50 Growth (77-90) Index 1.9% 22.1% 9.3% 9.9% 9.1% 10.1%

Source: SuperRatings estimates

Pension returns were also positive in August. The median balanced pension option returned an estimated 1.7% over the month and 19.7% over the year. The median pension growth option returned an estimated 2.0% and the median capital stable option also increased an estimated 0.7% in the month.

Pension returns to August 2021

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.7% 19.7% 8.6% 9.3% 8.7% 9.9%
SRP50 Capital Stable (20-40) Index 0.7% 8.5% 5.1% 5.3% 5.2% 6.1%
SRP50 Growth (77-90) Index 2.0% 23.9% 10.0% 10.8% 9.9% 11.3%

Source: SuperRatings estimates

Release ends


Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the merits of the superannuation or pension financial product(s) alone, without taking into account the objectives, financial situation or particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness. If SuperRatings advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each superannuation or pension financial product before making any decision about whether to acquire a financial product. SuperRatings research process relies upon the participation of the superannuation fund or product issuer(s). Should the superannuation fund or product issuer(s) no longer be an active participant in SuperRatings research process, SuperRatings reserves the right to withdraw the rating and document at any time and discontinue future coverage of the superannuation and pension financial product(s).

Copyright © 2021 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

In this video, Dan Moradi, Portfolio Manager for Listed Products, provides an update on the Australian equity market following an interesting August reporting season and takes an in-depth look at how various sectors and companies performed.

The August reporting season was strong, highlighted by a very strong rebound in earnings as we cycled through the COVID affected numbers of FY20. Company dividends surprised to the upside, reflecting the relatively strong balance sheets across the market and improving conditions. Buybacks and special dividends were also a feature, with around $18 billion in buybacks announced alongside special dividends. The big banks, delivered on capital returns, CBA, ANZ and NAB have announced buybacks totalling $10bn, while retailers like Wesfarmers and Woolworths also rewarded investors. Telstra, Suncorp, Amcor and BlueScope also announced buybacks.

 

 


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

According to a report in Bloomberg recently, while Vanguard data show a portfolio with 60 equities/fixed income mix returned an average 9.1% a year from 1926 to 2020, JP Morgan Asset Management recently estimated it will return just 3.7% over the next decade. Why? In a world where 85% of developed-market government bonds are yielding below 1%, the likely returns from the fixed income component of the portfolio has plunged, as shown in Figures 1 and 2.

Figure 1

Figure 2

So, this raises a question that we are getting asked by our clients – why even bother having fixed income within my portfolio?

When answering this question, it is important to think about what the reasons were for including fixed income in your portfolio in the first place.

At Lonsec, we believe that fixed income generally can play three roles in a portfolio:

1. As a diversifier to equities – bonds dampen overall portfolio volatility when held in a portfolio with riskier assets such as equities;
2. As a defensive asset that “will not go down” – so may be suitable for the risk averse investor with a primary objective being the preservation of capital; and
3. As a provider of a steady income stream – regular income payments from bonds provide a stable income stream for retirees

Figure 3 shows the rolling three year returns for global equities and global bonds and serves to highlight the relatively low volatility of global bonds compared to global equities.

Figure 3

However, when faced with the prospect of challenging returns, the reasons for inclusion tend to fall by the wayside and we start to focus on where to find better returns. As a result, we have seen many investors move out of fixed interest securities, especially longer term government bonds, in favour of equities or a taking a bar bell approach by investing in the extremes of lower quality investment grade bonds and short duration cash like securities. This is a dangerous proposition especially for those in retirement.

Becoming a victim of short-termism and negative momentum can shift your portfolio greatly to one that effectively eradicates each of those objectives we listed above. Why?

1. When we increase our allocation to equities or riskier assets, we are reducing our diversification. This will significantly increase the volatility of the portfolio.
2. Whilst the short duration assets will act has a buffer during times of market volatility, we have seen time and time again, that lower quality investment bonds will typically have their correlation to equities rise to 1 during periods of market stress and produce a very significant negative return that effectively wipes out any ‘buffering’ that the short duration assets may have provided.
3. During periods of economic stress, the stability of income from equities can change quickly. We saw this last year when many banks cut their dividends for a short period of time to ensure their books were able to withstand the changing economic landscape.
4. For retirees, unless the income provided through dividends and higher yielding fixed income securities is sufficient enough to live on, the impact of falling markets when in drawdown can be catastrophic to the long term viability of a retirement portfolio.

The question around the validity of longer duration bonds in portfolios is a valid one. Fund managers have been able to lean on these as performance enhancers as dovish central banks have overseen 20 years of falling interest rates. This, coupled with the relentless demand for safe haven assets from investors, especially during times of equity market stress, has seen abnormally high returns being achieved in this end of the market.

A fact that we all quickly forget about volatility is that with riskier assets not only do you have a greater probability of producing higher returns, you also have a greater probability of producing lower returns.

Whilst historically it has been easy to forget about fixed interest as the asset class has taken a backseat to the action packed excitement of the sharemarket, we cannot do this anymore, especially if you are approaching or in retirement. This is the stage where preservation of capital with a guaranteed income stream becomes the most important goal.

For those especially, bond investors now have three choices:

1. Take on more risk to generate higher yields;
2. Lower return expectations for the short to medium term; or
3. Accept low rates as something they cannot change.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

The upward trajectory in equity markets has continued unabated. Markets continue to be supported by low interest rates and central bank liquidity support. The US Federal Reserve’s recent comments that that they would continue their asset purchase program and that interest rates are not expected to rise anytime soon has added fuel to markets. This is despite growing concerns of rising inflation, which has been a major focal point for central banks and investors alike. One of our observations is that markets are disregarding any negative news which is of concern as this is typical behavior in the late stages of a bull market. Uncertainty also remains as to the playbook the pandemic will follow. The spike in the Delta strain of Covid-19 has highlighted the evolving nature of the virus and, as we have seen domestically, it has had a material impact on Australia’s ability to ‘open up’, which has had a detrimental impact on many households and small businesses. Furthermore, geopolitical risk continues to flare up with the recent retreat of the US from Afghanistan creating a power vacuum in that region.

Our asset allocation positioning has been positive for investors as we have maintained an overweight exposure to risk assets such as equities. We are seeing that asset valuations in some sectors are looking stretched as the market has extended its rally. We are looking at ways to further diversify our portfolios as well as looking at opportunities to take profits via portfolio rebalancing where appropriate. The main challenge from a portfolio construction perspective at the moment is that bonds and cash do not look particularly attractive, so the hunt for other diversifying assets is a focus for us. Within our multi-asset portfolios, we have incorporated a range of assets such as gold and alternative strategies to provide diversification from equities and bonds.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

With half the country in what seems never ending rounds of lockdowns and pandemic fatigue setting in, one of the last things most Australians want to do is look at their Superannuation balances and investment options. That is, however, exactly what SuperRatings is wanting us to do, as neglecting your super or responding to short term market moves can have a detrimental effect on your super balance.

SuperRatings Executive Director Kirby Rappell says, ‘We looked at the impact of switching out of a balanced or growth option and into cash at the start of the pandemic and found that those with a balance of $100,000 in January 2020 and who switched to cash at the end of March would now be around $22-27,000 worse off than if they had not switched.’

This effect of switching into cash as a response to market turmoil is also seen when looking at returns over the past 15 years. In this period, a typical balanced Super option has risen substantially, with a balance of $100,000 in July 2006 accumulating to $247,557, more than doubling in size. Those members investing in a growth option have experienced an even stronger result, with a similar starting balance growing to $254,006. Share focused options have delivered the highest returns, with the median Australian shares option growing to $276,099 and the median international shares option growing to $271,051, though these types of options involve greater risks. Over the same period, a $100,000 balance invested in cash would only be worth $151,158 today.

When considering your Super options, you don’t need to go it alone as many Super funds provide advice and tools to their members. Says Mr Rappell, ‘Most funds will offer scaled advice for free or at a low cost, with members able to get advice on topics such as contributions, investment options, insurance in the fund and the transition to retirement.’ Scaled advice is general in nature so you will need to check if your situation and goals align with the advice.
Continues Mr Rappell, ‘For members who want more tailored advice, some funds will offer comprehensive advice that will also take into account your financial assets outside of superannuation.’ While there will be a cost associated with this comprehensive advice, most funds will allow the cost of the advice to be deducted from the superannuation account, just make sure you check any costs and how they can be paid before agreeing to get the advice.
Looking at more recent returns, balances continued to grow in July. The typical balanced option returned an estimated 1.3% over the month and 18.5% over the year. The typical growth option returned an estimated 1.3% for the month and the median capital stable option also increased 0.9% in the month.

Accumulation returns to July 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 1.3% 18.5% 7.9% 8.4% 8.0% 8.6%
SR50 Capital Stable (20-40) Index 0.9% 7.8% 4.5% 4.5% 4.8% 5.3%
SR50 Growth (77-90) Index 1.3% 22.7% 9.2% 9.5% 8.9% 9.6%

Source: SuperRatings estimates

Pension returns were also positive in July. The median balanced pension option returned an estimated 1.3% over the month and 20.0% over the year. The median pension growth option returned an estimated 1.5% and the median capital stable option also rose an estimated 0.9% in the month.

Pension returns to July 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.3% 20.0% 8.4% 9.1% 8.5% 9.5%
SRP50 Capital Stable (20-40) Index 0.9% 8.6% 5.2% 5.2% 5.2% 5.9%
SRP50 Growth (77-90) Index 1.5% 24.4% 9.7% 10.3% 9.8% 10.6%

Source: SuperRatings estimates

Release ends


Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the merits of the superannuation or pension financial product(s) alone, without taking into account the objectives, financial situation or particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness. If SuperRatings advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each superannuation or pension financial product before making any decision about whether to acquire a financial product. SuperRatings research process relies upon the participation of the superannuation fund or product issuer(s). Should the superannuation fund or product issuer(s) no longer be an active participant in SuperRatings research process, SuperRatings reserves the right to withdraw the rating and document at any time and discontinue future coverage of the superannuation and pension financial product(s).

Copyright © 2021 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

The recently released Intergovernmental Panel on Climate Change (IPCC) Report made for sobering reading. Based on the most up to date, science-based understanding of the climate system and climate change, the report found that it “is unequivocal that human influence has warmed the atmosphere, ocean and land. “ According to the report, human influence has ‘very likely’ to ‘almost certainly’ contributed to global land and ocean warming, the retreat of glaciers, the decrease in Artic sea ice, rising sea levels and the increase severity and number of extreme weather and climate events that are occurring across every region across the globe.

The Lonsec Sustainable Managed Portfolios have a dual objective of delivering strong risk-adjusted returns while also making a positive contribution to the key environmental and social challenges facing society as measured by the United Nations Sustainable Development Goals (SDGs).

Climate change impacts a number, if not all, of the SDGs.

For example, changing weather patterns, more severe droughts, floods and tropical cyclones can significantly impact SDG 2 Zero hunger (and consequently SDG 3 Good health and well-being) due to increased food insecurity. SDG 1 No poverty will also be affected, as livelihoods, particularly in the agricultural sector, are lost. Climate change is also clearly impacting SDG 14 Life below water with coral bleaching events and ocean acidification on the rise and 15 Life on Land as decreased biodiversity, changing climate zones, and heatwaves threaten the extinction of many species.

The Lonsec Sustainable Managed Portfolios seek to address climate change in several ways;

  • We invest in strategies that are actively looking to solve the challenges of climate change. Impact strategies such as the Impax Sustainable Leaders Fund which invests globally in companies that are active in resource efficiency and environmental markets and the Pengana WHEB Sustainable Impact Fund which invests in sustainable investment themes including environmental themes such as cleaner energy, sustainable transport and water management. The Lonsec Sustainable Portfolios also have exposure to green and sustainable bonds through our fixed income strategies, where the proceeds of the bonds go directly towards funding climate solutions such as wind and solar farms.
  • We limit our exposure to fossil fuels, and in particular, thermal coal. As the highest emitting fossil fuel, coal is simply an exposure we want to avoid. Most of our underlying managers go further and exclude fossil fuels altogether which we strongly encourage as alternative technologies including renewables become more accessible. We monitor the portfolio’s exposure to each of the major fossil fuels (coal, gas, oil) using a third-party data provider to ensure that our exposures are low or zero and aligned with the goals of the Paris agreement, and we track the overall carbon footprint of the portfolio.
  • We invest in strategies such as the BetaShares Global Sustainability Leaders ETF (ETHI) that targets ‘climate leaders’. These are global large cap companies that have passed screens to exclude companies with direct or significant exposure to fossil fuels. 100% of the power generated by the companies in ETHI come from renewable sources.
  • We invest with managers that have strong Environment Social and Governance (ESG) integration, that is, they understand and incorporate the physical and transition risks of climate change into their financial analysis. They are managers that engage directly with companies around their climate disclosures and on their transition plans to net zero emissions. While targeting climate leaders and excluding fossil fuels can assist in keeping the carbon footprint of the portfolio low, it does little to reduce carbon emissions in the real-world – it simply passes the problem and emissions onto other investors. All companies, not just those focused on climate solutions, need to be part of the transition if we are to have a real-world impact. We want fund managers to work with all companies to reduce their emissions across the board and improve the carbon footprint of the entire market. In this regard, we see ESG integration as playing a critical role in delivering to the SDGs.

We believe the Lonsec Sustainable Portfolios are well positioned from a climate change perspective, however, more needs to be done. We will continue to work with fund managers and encourage more ambitious goal setting. At present we have 35% of FUM in the portfolio committed to net zero emissions by 2050 either through the Net Zero Asset Managers initiative or independent commitments. We want to see that number increase. It is important to Lonsec and important to our clients that we seek to urgently address climate change. We believe that addressing the impacts of climate change can help build more resilient portfolios and deliver more stable and higher long-term returns for our clients.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.