Best of the Best 2023: How we chose the winners
Identifying Australia's best superannuation, managed funds, exchange traded funds (ETFs), banking products and insurers is no easy task. There were hundreds of product providers and thousands of their products, choices and options to assess.
Rainmaker, publisher of Money, has been reviewing superannuation, managed funds and their investment managers for more than 20 years and this year we again led the reviews and assessments.
To conduct the banking products assessments, Rainmaker and Money teamed 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 it was done.
There are more than 500 super products in Australia offering tens of thousands of investment choices. Money's awards span best-performing products, best-value products and best value for insurance.
To find Australia's top performers, Rainmaker reviewed MySuper products and asset classes that include growth, balanced, moderate (capital stable), equities, property, bonds, cash and ESG investment options. MySuper products are default flagship products used by most employees for their employer-paid superannuation. These products hold more than 60% of all the superannuation owned by working Australians and are the cornerstone of their retirement savings.
MySuper products come in two main types: diversified single-strategy products that spread your savings across all the major asset class, and lifecycle products that invest your savings differently depending on how old you are.
Lifecycle products were assessed in a similar way, except Rainmaker examined which ones had the best overall rankings across options designed for fund members aged in their teens, 20s, 30s, 40s, 50s and 60s. The best lifecycle product is the one that ranked the highest across all the age groups.
Rainmaker identifies Australia's best-performing super products and investment choices by assessing not just how they went over the past five years, but by how they went over the past 10, five and three years and how they went over the 12 months to June 30, 2022. Rainmaker's proprietary composite scoring method enables us to reward consistency and spot the super products that perform best over good times and bad.
It must be said that 2021-22 was a tough year for super funds, as they experienced one of their worst returns in 35 years. But we should recall that the previous year, 2020-21, was the best yet, so it's swings and roundabouts. This led to another changing of the guard for Australia's best super funds, with some newer brand names making their first appearance in the winners' circle. But this shows just how competitive the superannuation market is.
Identifying the lowest-cost products is done by assessing the investment, administration and member fees a fund member would pay if they had both $10,000 and $50,000 in their super account. That is, we ranked funds on both. Zero-fee indexed options aren't actually free because you still have to pay fees to be in the fund.
Fees for retirement products, also known as pension products, were assessed by reviewing the fees they would pay if they had $100,000 and $500,000 in their account.
The best value super product for young people, meanwhile, is the best product when we look at the returns people in their 20s would have received taking into account the fees that hit their lower account balance.
To be eligible for the Money awards, a superannuation product must be public offer and be AAA rated by Rainmaker.
Managed funds and ETFs
When choosing which managed funds or exchange traded funds to invest with, investors are looking not just for funds that scored the highest investment returns but that also managed their investment risks. This includes an assessment of which managed funds most protect your capital.
This multi-phase process requires Rainmaker to identify such factors as how much their performance changed month to month, how much and how often it went down versus up compared with the market and its peers, and which ones get the highest returns per unit of risk.
This review was done over the short, medium and long term to June 30, 2022. The best investment managers or ETF providers are those that have the most funds shortlisted in the most major categories.
Rainmaker and Money's banking products research partner, InfoChoice, monitor thousands of products offered through almost 150 banks and non-bank 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 36 months and charge a different annual fee in the first year, reverting back to the standard annual fee in the second year. To assess these, Rainmaker and InfoChoice looked at costs over two years.
Home loans were assessed using the annual average percentage rate (AAPR) applicable over 25 years with an 80% loan valuation ratio. This was done over multiple categories, ranging from basic low-cost loans through to more flexible loans with redraw facilities, portability or splitting.
Three-year and five-year fixed-rate loans and home equity loans were also assessed. Personal loans covering unsecured general purpose, car and debt consolidation were assessed using their AAPR applicable over five years.
Bank accounts were assessed using their interest rates counting the impact of fees. But as many banking 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 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.
Home and contents insurance is determined by where you live, the type of building, your home security system and whether someone is home during the day. In this era of increasingly intense weather events and natural disasters, being in bushfire and flood-prone areas can significantly add to your premiums.
Most life insurance is now accessed through super funds. So, Rainmaker and Money have again reviewed which funds offer the best overall deals and which ones offer the best deals for death only, death and TPD, and income protection cover for white collar and professional men and women.
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