Best of the Best awards: how we choose the winners
Identifying Australia's best superannuation funds, managed funds, exchange traded funds, banking products and insurers is no easy task. There were almost 800 product providers and 9000 products to assess.
Rainmaker Group, publisher of Money, has been reviewing superannuation, managed funds and their investment managers for almost 20 years, and this year it led the reviews and assessments for the Best of the Best awards. Rainmaker is also the publisher of SelectingSuper website, the Good Superannuation Guide and the Good Investment Guide.
To conduct the banking products assessments, Rainmaker and Money teamed up with InfoChoice, one of Australia's leading financial product comparison websites.
Reviewing each market segment requires a different approach - and the sections below describe how each category was decided.
There are more than 500 superannuation funds and products in Australia offering tens of thousands of investment choices. The Best of the Best superannuation awards span the best-performing products, lowest-cost products and best-value insurance.
To find Australia's top- performing superannuation products, Rainmaker reviewed MySuper products, growth, balanced and moderate (capital stable) investment choices. MySuper products are the default flagship products used by most employees for their employer-paid superannuation. These products hold about $700 billion and for most people it's the cornerstone of their superannuation.
MySuper products come in two main types: diversified single-strategy products that spread your savings across all major asset classes; and lifecycle products that invest your savings differently depending on your age.
Rainmaker identifies Australia's best-performing superannuation products and investment choices by assessing not just how they went over the past three years, but by how they went over the past five and 10 years - as well as how they went over the 12 months to June 30, 2019.
A product might have high five-year performance but in the past 12 months its performance could have dipped. Using a composite scoring method enables us to reward consistency and spot the superannuation products that perform best over the most time periods.
Lifecycle products were assessed in a similar way, except Rainmaker examined which products had the best overall rankings across options designed for fund members aged in their 20s, 30s, 40s and 50s.
Identifying the lowest-cost products is done by assessing the investment, administration and member fees a fund member would pay if they had $50,000 in their superannuation account.
The lowest-cost indexed balanced option was identified using a $20,000 account balance. Fees for retirement products, also known as pension products, were assessed by reviewing the fees a retiree would pay if they had $250,000 in their account.
To be eligible for Money's awards, a super product must be public offer and be AAA-rated by SelectingSuper.
Managed funds and ETPs
When choosing which managed funds or exchange traded products (ETPs) to invest with, investors are looking not just for funds that may have achieved the highest performance but which ones also most efficiently manage their investment risks. This includes assessing which managed funds most reliably protect your capital.
This two-phase process required Rainmaker to identify funds with strong performance and then assess which have good and consistent investment risk management. To do this, Rainmaker assessed such factors as how much a fund's performance changed month to month, how much and how often it went down versus up compared with the market and its peers, and by assessing which ones get the highest returns per unit of risk.
This assessment is done over the short and medium term to June 30, 2019. To be eligible for the awards, managed funds and ETPs need to have a minimum investment of about $20,000 or be accessible through a platform or the
ASX. The best investment managers or ETP providers are those that have the most
funds shortlisted in the most major categories.
Rainmaker and Money's banking products research partner, InfoChoice, monitors thousands of products offered through almost 150 banks and non-bank product providers.
Term deposits (TD) were assessed according to which paid the highest interest rates. Short-term TDs were assessed on rates paid for terms shorter than 12 months. Long-term TDs were assessed for terms longer than one year.
Credit cards were assessed by applying their annual interest rate to a revolving credit amount and adding the impact of fees. Many credit cards offer interest rate discounts that may span up to 15 months and may charge a different annual fee in the first year, reverting to the standard annual fee in the second year. To assess these impacts, Rainmaker and InfoChoice looked at the costs over two years.
Personal loans covering unsecured general purpose, car and debt consolidation were assessed by deriving the total cost of a loan and adding any application and monthly service fees. The interest rates used to compare personal loans were either the five-year fixed rate or, if this wasn't offered, the variable rate.
Home loans were assessed using the latest variable interest rate in a similar way. They were grouped according to whether they were basic home loans with a redraw facility or flexible home loans with more features such as an offset facility; being able to split over fixed and variable; and being able to transfer it to another home if you move.
Three-year fixed rate loans, home equity and five-year investment loans were also assessed, based on the principal and interest over either three, five or 25 years.
Bank accounts were assessed based on their interest rate and counting the impact of fees. But as many bank accounts no longer charge ATM or phone banking fees, and have greatly reduced monthly fees, comparing these accounts is less complex than it used to be.
Insurance is one of the most important financial products you can buy. But it can be complex and hard to compare because premiums can vary according to the value of what you want to insure and how risky the insurer assesses you to be. For example, your car insurance premiums can go up the more kilometres you drive, the younger you are, the more customised your car is and even depending on its colour.
House insurance, meanwhile, is determined by where you live, the type of building it is and things like security systems and whether someone is home during the day.
Most life insurance is now accessed through superannuation funds. So this year's insurance assessments now include a special review of which funds offer the best deals for death only, death and TPD, and income protection cover for white collar and professional men and women.