Heron ERF Ratings for 2008 finds “large variation”

Released: 16 June, 2008

AUSfund tops the ratings for 3^rd year

The Heron Partnership has now completed their 2008 Heron Quality Star Ratings assessment of Eligible Rollover Funds and congratulates AUSfund on being the Top Rated ERF in Australia.

The SuperTrace ERF is also congratulated on being classified as an “outstanding” product and has been awarded 5 Heron Quality Stars for the first time. SuperTrace is only the second ERF to ever receive a 5 Star rating.  Last year AUSfund was the only ERF to be awarded 5 Heron Quality Stars.

The Heron Partnership’s Managing Director, Chris Butler, said, “Although AUSfund has received the highest rating again this year the competition was much stronger than in 2006 and 2007.  A number of ERF’s have made improvements to their products and as a consequence we have also awarded SuperTrace with 5 Heron Quality Stars and AMP ERF, Aon ERF and the National Preservation Trust with 4 Heron Quality Stars.”

Mr Butler said, “Notwithstanding the product improvements to some ERF’s over the past 12 months, we continue to observe very large variances in the Australian ERF market, as is demonstrated in the scoring range of 85.26 to 35.75.”

Through the Heron Quality Star Ratings assessment process, the maximum score a product can achieve is 100.

Sixteen ERF’s were included in The Heron Partnership’s assessment this year.  Synergy Secure is a new ERF and has been included in the assessment for the first time.

ERF’s continue to be an important sector of the superannuation market with combined assets now around $6b managed on behalf of over 5.2m account holders.

The Heron Partnership utilises a holistic methodology to assess and rate the various components of an ERF, grouped under 4 Areas of Importance of Organisation, Investment Arrangements, Relocation Activity and Fees.

Wendy Barton, an Executive Director of The Heron Partnership led the ERF assessment process.  Ms Barton said, “Based on our assessment of Organisation, the larger ERF’s rated well due to their experience, credibility of size, sound administration arrangements, Trustee service to members and an established track record.  The ERF’s that did well in this Area included the AMP ERF, SuperTrace and AUSfund.

“Through our assessment of Investment Arrangements, the Public ERF achieved the highest rating just ahead of AUSfund, then followed Synergy Secure.  Both the Public ERF and AUSfund scored highly due to both having measurable and well-constructed investment objectives, external and diversified investment managers and an external investment adviser.”

“In terms of Relocation Activity, AUSfund demonstrates the most activity around a member focused strategy for locating lost members and simplifying access of documentation and cross fund matching.  In fact AUSfund encouraged over 173,500 of its members, representing $82.6m in member assets, to rollout of AUSfund to their “active” super account.  SuperTrace, Super ERF and National Preservation Trust have also increased their focus in this area significantly.  Unfortunately, there still remain some ERF’s that do not have a web site and make contacting them more difficult.”

“Our assessment of Fees resulted in SuperTrace and SMERF being the stand out for the lowest fee structures across all three scenarios that we constructed with different member balances.  SuperTrace has significantly reduced their fees since last year’s assessment.”

When releasing the ERF ratings for 2008, Mr Butler, said “The primary goal of the Heron Quality Star Ratings is to provide a realistic and objective representation of the strengths and weaknesses of a product.  The ratings are based on feature specific benchmarks which guide Heron’s assessors to rate the feature objectively, with all products therefore being rated on the exact same basis.  The ratings for each feature are aggregated to an overall numeric rating for each product.

The Heron Quality Star Ratings have 5 levels as follows:

¶¶¶¶¶        Outstanding

¶¶¶¶           Commendable

¶¶¶              Good

¶¶                  Poor

¶                     Unacceptable