Insights for advisers, by advisers

Eleven new super funds gain AAA ratings from Rainmaker


As the industry fund sector embarks on what will be a busy and decade shaping year, Rainmaker’s recent release of its latest batch of AAA-rated super funds couldn’t be more timely.

The research house seeks to assess the quality of 692 products issued by 178 superannuation funds, including both industry or so-called “not for profits” and retail funds. The analysis and comparison occurs across investment options, fees, insurance and the funds’ ongoing communication.

Most importantly for consumers, in recent years the assessment has expanded to consider the risk-adjusted performance for the main My Super ‘default choices’. There remain major questions about the comparability of ‘balanced’ and ‘growth’ funds across the industry given the lack of any fixed reporting requirements, hence this survey is an important step in that process.

According to the report, 29% of the 296 funds considered received the coveted AAA rating, 149 of which were industry and 49 from the retail sector. While the ratings likely provide little impetus in terms of capital flows given the default nature of contributions, they play an important role in maintaining transparency.

Of the 198 products, 187 retained their ratings from the previous year, showing the sustainability of their models with just eleven new funds added. These were: AMG Super’s Emplus Personal, Australian Catholic and Retirement Fund’s Retire Smart product, CFS’ Rollover and Super Fund, Military Super, CSC Retirement Income, GESB West State Super, Guild Super, Russell’s Nationwide Super, Spaceship, Suncorp Brighter Super and Bendigo’s Smart Options Employer Fund.

According to Rainmaker’s executive director of research, Alex Dunnin, “members in a AAA-rated fund can be confident their fund will deliver on its promises.” This couldn’t be more important at a time when pressure is ramping up on the industry, with APRA noting in a Senate hearing this week that it will be putting more heat on around eight so-called “dud” super funds over their persistent under-performance.

Interestingly, the number of funds receiving the top rating fell in 2020, due primarily to mergers between First State Super, Vic Super, WA Super and SunSuper, among others.

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