Archive for category: News & Insights

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 Fund
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

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

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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.

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.

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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.