Innholdsfortegnelse for December 2020 / January 2021 i Money Magazine

Money magazine was launched in July 1999. To my adult kids’ amusement, I keep the first cover shot on my study wall, showing a much younger Paul Clitheroe. Not a trace of grey hair! The headline was “Shares – Getting it Right”. Mind you, if you invested back in 1999, it was pretty hard to get it wrong. CBA was around $9.50, BHP $11.50, Woolworths $5.50 and so on. Sure, there will always be a few bad performers in any portfolio, which is why at Money we always suggest you spread your risk by owning a number of companies, or invest via a fund, ETF or your super. But as history would lead you to expect, despite the GFC and now Covid-19, patient, diversified shareholders have been well rewarded with…

THE BUZZ Working remotely cuts costs but there are losers As I write this column in early November, Covid-19 case numbers are heading in the right direction – at least in Australia. There are positive signs of borders re-opening across all states and territories but mass international travel remains a pipedream. How Australia recovers economically from this pandemic is something that I cannot foretell. But there’s plenty of research filtering through the Money email inbox that suggests in the longer term we’ll be overall financially better off for living through this experience. From a study of 1500 workers in August and September this year, the NSW Innovation and Productivity Council suggests that working remotely has increased productivity by an average of 13%. When NSW workers don’t commute, they have an…

When I was a kid I loved presents, especially from my grandma. Every year an envelope would arrive and I would excitedly open it to find a card that had a $5 or $10 note inside. It was the best. It didn’t matter that I had presents worth much more given to me – this was my money and I could spend it however I wanted. I was rich! I can’t remember what I bought with the money (no doubt a lot of 20¢ lolly bags and hours on the arcade game at the corner store), but that didn’t matter. The joy was in the moment of getting something that was mine, something I could control. The problem is that as we get older and wiser, the joy of small…

For small to medium enterprise owners struggling to grow their businesses, there is some light at the end of the tunnel. In October, research from Australia Post showed that while revenue fell up to 67% for some industries at the height of the pandemic, the shift to additional online activity saw non-store revenue for the average small business increase by between $105,000 and $708,000. This news followed hot on the heels of the federal government’s decision to extend the $150,000 instant asset write-off until June 30, 2022, which was mostly well received by the SME community. Notwithstanding these green shoots of positivity, 2020 has been a challenging year for many SMEs, which took significant revenue hits as the economy went into meltdown. However, as many have discovered, if you knuckle…

How well your super is tracking depends on a few key areas: how much you contribute, the amount taken out in investment fees and operating costs and – critically – your fund’s performance. It’s that straightforward. Why, then, do people take a lackadaisical approach to it? The simple answer is that so much of what happens in super takes place automatically without much effort on the part of the member. Most people are defaulted into their employer’s fund with contributions made on their behalf. But this passivity can come at a cost. “Contributions come out of what would otherwise be your wages. It is the member’s money and people should never forget that,” says Alex Dunnin, executive director of research and compliance at Rainmaker Group, which publishes Money. “We don’t…

The coronavirus was first detected in Wuhan, China, in mid-December of 2019; the World Health Organisation named it Covid-19 on February 11, 2020, and declared a pandemic exactly one month later. Most governments around the world implemented social distancing and lock-downs and imposed border restrictions to limit contagion and protect lives, but “killed off” economic activity in the process, sending the world economy into its worst recession since the Great Depression of the 1930s. The Organisation for Economic Cooperation and Development noted the economies of its 37 developed nation members shrank by 9.8% in the June 2020 quarter. The contraction would have been deeper if not for prompt central bank responses. Central bank actions have eased financial conditions, but increased government spending has played an even bigger role in limiting…

Every year for the past 20 years, the Money team has collated more than 100 Best of the Best awards in its annual bumper issue. We present these awards every year because we strongly believe there’s so much personal value to be gained from accessing quality, well-designed products for your investments, super, banking, telco and other spending needs. The most frequently asked question we receive about the Best of the Best is: why do we attribute them to the following year, in this case 2021, when they are published in 2020? This is because we believe that our award winners will stand you in good stead throughout the coming year. The providers in each category have no doubt had successful offerings in 2020, but we know they are also positioning…

Pendal, Best Investment Manager for 2021, dedicates itself to looking beyond the bottom line of companies it invests in. More than ever a company’s non-financial make-up determines its future performance. Richard Brandweiner, chief executive of Pendal Australia, says the element of active management that is so critical is stewardship. “A big part of how investors are going to perform is the way businesses are managed and boards behave,” he says. Never have non-financial factors played as large a role as now. “Black swan” events are now not only possible, but expected. “It’s a unique time for active management because of the amount of uncertainty that exists, with stressed valuations, with political and economic uncertainty and with the fact that the behaviours of companies and management are often falling short of…

GOLD WINNER MAGELLAN A portfolio constructed with a strong focus on risk and quality can survive an unexpected market collapse and protect investors’ capital Up to late September 2020, Australian investors were still pouring money into international equities, according to figures released by the Australian Securities Exchange (ASX) and Vanguard. This said, Australian investors have long been captured by a home bias, with domestic shares dominating most portfolios. The funds in this category are a great way to get diversification. The Magellan Global Fund has taken out top spot for the second year running. Crucially, Magellan was crowned the winner based on its risk-adjusted returns. “Our most important global risk-management tool is our portfolio construction,” says Magellan chief executive Brett Cairns. This means designing a portfolio that can deal…

GOLD WINNER IOOF An active approach to choosing investments aims to separate winners from the losers The IOOF MultiMix Balanced Growth Trust truly lives and breathes its “multi” moniker, having multiple managers, investment styles and asset classes rolled into one product. Arguably, active investing comes into its own during a down market. Having a team of professionals picking winners helps shield against the worst of it. “Dynamic asset allocation has become more popular as markets continue to be volatile,” says Stanley Yeo, IOOF deputy chief investment officer and head of equities.…

GOLD WINNER ALPHINITY Ethical investing is not just about avoiding “bad” companies; the skill lies in zeroing in on the “good” performers Environmental, social and corporate governance (ESG) investing continues to gain traction with investors, and it has also meant investment managers have had to look beyond traditional measures when selecting assets. In keeping with the trend, Money has introduced this new category to the Best of the Best awards. While the ESG shift has been further propelled by the global pandemic, there’s more to it than that. “Of course, the global public health crisis has acted as a wakeup call in many respects,” says Nigel Green, chief executive of the advisory group deVere. “It has prompted a growing collective awareness of mutual responsibility that fits perfectly into the…

GOLD WINNER BETASHARES If you are concerned about the environment, you can leave it to the experts to choose the investments that will benefit the planet The popularity of exchange traded funds is surging and sustainable ETFs are gaining a reputation as the best-in-breed across the managed funds landscape. No longer are sustainable investments regarded as an exotic asset class. Where do those funds invest? Overwhelmingly in Europe. According to Morningstar’s 2020 Global Landscape of passive sustainable funds, a record $188.8 billion was invested in Europe at the end of June, accounting for 9.2% of the continent’s passive funds and 75% of global passive assets. The US accounts for about 20%. Riding this wave is this year’s category winner, the BetaShares Global Sustainability Leaders ETF. “This increased interest in…

GOLD WINNER iSHARES Investors who want low-cost, broad exposure to the domestic sharemarket as the core of their portfolio need look no further Exchange traded products (ETPs) provide a cheap way to capture the local sharemarket and have won over investors for this reason. At the time of writing, domestic exchange traded funds (ETFs) have taken in $5.4 billion in 2020 compared with $2.5 billion at the same point last year. Despite the pandemic, domestic ETPs have grown 19% over the year, making up the second biggest slice of the Australian ETP market at about a third. It’s an all-new podium in our awards, with none of the top three placeholders from 2020 featuring this year. iShares leads the league with its flagship fund, the iShares Core S&P/ASX 200…

Aware Super had an especially busy year – it surpassed $100 billion in funds under management, adopted its new name to reflect its recent mergers, with thousands of new members, and has won a new award. This is the first time Money’s Best Super Fund has been won by Aware Super (or its pre-merger funds of First State Super, VicSuper and WA Super). “It’s been a year like no other – we weren’t expecting national bushfires, floods, droughts and a pandemic plus two mergers,” says chief executive Deanne Stewart. “But at the same time it’s amazing how focused the team has been through Covid-19. While we’ve worked to keep the team focused and looking after their health and wellbeing, they’ve been so motivated to get these deals done as well…

GOLD WINNER BENDIGO SMARTSTART SUPER Every dollar counts for a retiree, so low fees will help maintain your income Retirement products have little time to make up losses and they have finite balances, so the cost is important in making your money last as long as you do. Bendigo SmartStart Pension is a simple, easy-to-understand product with low fees. “We are able to provide a high-value product, particularly for members with a balance close to the Australian average at retirement,” says Justin Hoare, Bendigo and Adelaide Bank head of superannuation. “It is also important for us to enable retirees to easily track their balance alongside their other assets at a time when it is important to them, which is why we provide ready access to balances on their Bendigo…

GOLD WINNER PRIME SUPER Property has been a quiet long-term achiever, showing it can handle an economic shock Prime Super’s property investment option may not be particularly well known, but the introduction of this new award reveals to Money readers that it has been a consistent performer over the longer term. Lachlan Baird, the super fund’s chief executive, says the longterm success is due to an experienced investment team that closely monitors markets and actively manages portfolios. “We also focus on direct investments that can weather broad impacts on the economy, such as Covid-19. This year we worked with climate experts to assess how our infrastructure and property portfolios might be affected by climate change. We want to strengthen strategies to protect assets against climate risks such as floods,…

GOLD WINNER WA SUPER Global shares have still managed to deliver a solid result in challenging conditions Global shares performed better than Aussie shares this year but were still a little subdued compared with previous years’ returns. Gold winner WA Super, which is merging with Aware Super, our 2021 Best Super Fund, is a solid performer in its own right. While WA Super has returns in excess of its peers over most time periods, it’s important to note that part of the judging process is the rankings, which have placed it consistently higher than its peers. And products have been ranked by best weighted performance over one, three, five and 10 years. “We were delighted to be recognised as winners,” says WA Super chief investment officer Chris West. “It’s…

GOLD WINNER HESTA Fund members are strong supporters of HESTA’s groundbreaking stand on environmental and social issues It’s one of Australia’s leading industry super funds and, this year, HESTA has won four of the Best of the Best awards: Best Balanced Pension Products, Best Balanced Super Products and Best ESG Super Products. While it is a leading ESG advocate, what separates it from the crowd is that it doesn’t grandstand. It just gets on with it, says Alex Dunnin, Rainmaker’s head of research. “Some super funds and investment managers talk a big game on ESG,” he says. “HESTA leads by example and sets the pace. Even better, it shows us that doing this makes the fund better, boosts returns and improves the retirement outcomes for its members.” It claims…

GOLD WINNER HESTA A commitment to responsible investing requires a long-term, patient view Among funds focusing on environmental, social and governance principles, HESTA retains the top spot this year. Returns overall have slipped because of Covid-19. HESTA chief executive Debby Blakey says the fund’s desire to be a truly responsible investor is deep but the members’ best interests are served if it supports a healthy economy. “As a long-term, patient investor, we are very clear with companies on our approach and voting,” she says. “We were one of the first of the big funds to launch a climate transition plan, which I think is very important. It’s the longterm challenge for investors and obviously we’ve been very active on other issues.” Future Super, making its first appearance in the…

GOLD WINNER QSUPER If you’ve just started in the workforce, low fees can help your savings grow faster This year has shaken up the top super funds in this category, which focuses on members aged 25 years who have a $5000 account balance. All the top five are newcomers. Fees can have a big impact on small balances, but low fees must be balanced with solid returns. QSuper chief executive Michael Pennisi says it’s important to recognise a product that helps young people build their super faster. “QSuper gives young people who are starting their working life, and those with low balances, the support they need to grow their savings. Our fees are simple and fair. Unlike some funds, we don’t charge a fixed fee, which can eat away…

GOLD WINNER VISION SUPER For a low fee you can have more control over where your savings are invested For those who want to exercise a greater choice in where their super is invested, platforms provide a range of investment managers and funds for allocating their savings. Super is the biggest segment in the platform sector, growing 1% to $369 billion this year. This category was added to the Best of the Best line-up last year and in 2021 Vision Super retains its top spot with fees of 1.1% on balances of $10,000, reducing to 0.48% on $50,000. “We’re delighted to see our efforts to maintain the lowest possible cost platform and best value insurance products recognised by Money magazine,” says Stephen Rowe, Vision Super’s chief executive officer. “Our…

GOLD WINNERS BANK BANKWEST MAJOR BANK BANKWEST NON-BANK COLES Cardholders are still looking for transparency and value for money Premium credit cards are packed with features, but you pay for them through high annual fees and rates, so it pays to shop around. The Bankwest Breeze Platinum Mastercard has taken out the major bank category for the second year running. While the credit card space is changing, customers still expect simplicity, transparency and value for money, which is why the Breeze Mastercard remains popular with customers, says Louise Tovey, general manager, everyday banking, at Bankwest. The Coles Low Rate Master-card comes first among the non-banks.…

GOLD WINNERS BANK BANK OF MELBOURNE NON-BANK CUA You can cut the amount of interest you pay by switching cards, but you need to be disciplined in making the repayments Comparison website RateCity, in its analysis of Reserve Bank data, estimates that Australians paid $6.91 billion off their credit cards between the start of Covid-19 and the end of September 2020. Not only are we paying off our credit cards, we’re also switching to other forms of payment. RateCity says the RBA data shows there were 654,202 fewer credit card accounts open in September than in March. Sally Tindall, research director at RateCity, says it was good to see so many Australians paying down their debt during the pandemic. However, “the pace at which we’re clearing our debt has started…

GOLD WINNERS BANK BANK OF SYDNEY MAJOR BANK BANKWEST NON-BANK MYLIFE MYFINANCE If safety is your priority, the federal government’s guarantee is reassuring Term deposits are a safe and guaranteed way to set aside your savings. While they won’t attract high interest rates like a savings account, they offer more than a transaction account. It has been a tough year for term deposit holders, though, as the Reserve Bank continued to lower interest rates in a bid to revive the economy. A key attraction of a term deposit in a time of uncertainty is that your savings are protected by the federal government up to the value of $250,000. In other investments promising higher income your capital is at risk if the company goes belly-up. This year’s winners offer very…

BOB CHRISTENSEN Bob, a senior sub-editor at Money, says: “Sorry kids, but this is going to be a low-frills, minimalist gift-giving festive season. Our family has been fortunate, but the terrible impact of the pandemic generally has reminded many of us that we have far too much unnecessary stuff in our lives, and that there is a big difference between needs and wants. Less is okay, even at Christmas!” SHARYN MCCOWEN Sharyn, our digital editor, says: “My nephews are old enough to read so if I don’t write LEGO, I’m in trouble. My dog is still learning to read but I can reveal that Santa is bringing her a new stash of Kong tennis balls, which endure better than most the affections of a real-life Bluey. As for my wonderful husband, we bought…

Your question very much reflects the world we live in, Nathan. Your situation is typical of the work environment that has developed over the past couple of decades. The good news, though, is that this presents some powerful wealth-creation opportunities and I believe you are in a sweet spot for this. I am not a fan of our overly complex tax system. One of my least favourite rules relates to negative gearing of residential property. Sure, I’ve used it as part of my own wealth-creation plans and I encourage others to do the same. However, I still don’t like it.  I suspect that Money magazine readers are all over the rules around negative gearing, but let’s recap. The interest on money borrowed to buy an investment can be offset against…

LET’S GET PRACTICAL After the tough year we’ve had, the temptation to throw caution to the wind and make this Christmas an extra-special celebration is understandable. But Christmas can lead to a financial hangover in the best of years. The website finder.com.au estimated earlier this year that 37% of Australians, or more than seven million of us, kicked off 2020 with a Christmas debt hangover. Most of this was racked up on credit cards with their accompanying high interest rates and low minimum repayments, which can see purchases being carried into the never-never. As we now know, this was not the time to be carrying unnecessary debt. As the pandemic took its toll on the economy, it was a rare household that didn’t take some form of economic hit. So…

• Decide on your budget before you go shopping. If you anchor yourself to a $50 spend before you go, you are less likely to grab the $200 gift card that is also on the rack. Our brains will make an incorrect judgement about what is an appropriate spend if we aren’t settled on an amount before we are influenced by the choice architecture of the shop. • Think about what makes the recipient unique or special and how you want the gift to signal how well you know someone. Don’t be afraid of taking a risk. • Go to the store, website or shopping centre you are buying the gift card from directly. Third parties sometimes add extra fees on cards.…

Buying a home is likely to be your biggest investment, so why not try to make some extra money from it, especially if cash is tight. Maybe work is scarce because of the fallout from Covid-19 lockdowns. If you have a spare room, you can turn this unused space into a cash cow. This usually involves sharing your home with other people, but not always. You could rent out the room as storage on a person-to-person (P2P) site such as Spacer (spacer.com.au). You list your space, set the rules, including a timeframe and price, and people will hire it to store their possessions. Spacer provides some rough guides on pricing – a spare bedroom could make about $150-$200 a month and an average shed about $100-$150. It is free to…

The federal government has proposed a MySuper reform package scheduled to launch in July, 2021, claiming it will save Australians $17.9 billion over 10 years. It has four key elements: 1. Your super account will be “stapled” to you via the ATO site and follow you when you change jobs. This will end the creation of unintended multiple accounts and the plethora of fees it generates. The government estimates multiple accounts drain $450 million from fund members each year. 2. The government will set up an interactive online comparison tool, ranking funds by performance and fees. Performance will be measured over eight years. Moving to a better-performing fund could leave someone entering the workforce $87,000 better off in retirement. 3. Underperforming funds will have to advise their members of this…

Not selling into panic is crucial for long-term investing success. So if you have been running your own share portfolio but find yourself doubting your ability to resist the temptation to sell when fear abounds, you might consider a different approach for the future. • The first is putting your money into a low-cost index fund and leaving it in the proverbial bottom drawer to ride out the market’s ups and downs. Simply treat these funds as a savings account to which you add periodically and don’t check their prices too often. • The second is a more active approach involving the “important asset allocation decisions” that Steve Johnson mentioned in his tweet (see main story). The idea here is to set a target asset allocation based on your objectives,…

It’s so true, and so often repeated, that it’s almost a cliché: this year has been the strangest in living memory. Socially, politically, economically – it’s been one trip around the sun that’ll be studied and remarked upon for decades to come. It’s been the same for investors. The fastest bear market in history, followed by the fastest recovery. And perhaps no more than for one class of investors and one type of company. Never has the list of set-and-forget “bottom drawer” stocks – and income stocks in particular – been so short and so uncertain. Banks, the investor’s friend for near on three decades, cancelled or severely cut their dividends, out of self-preservation or because ASIC told them they must. Previously peerless infrastructure businesses like Sydney Airport and Transurban…

Contact us To send a letter to the editor, write to: Rainmaker Group Level 7 55 Clarence Street SYDNEY NSW Australia 2000 or email money@moneymag.com.au For all inquiries and letters, please include name, address and phone details. Letters may be edited for clarity or space. Because of the high number of letters received, no personal replies are possible. Subscribe Phone: 136 116 Online: magshop.com.au Email: magshop@magshop.com.au Subscribe to the Money digital edition at magshop.com.au/money-magazine Visit Money online Check out our website and while you’re there sign up for our free weekly email newsletter. You’ll get our top money stories plus exclusive finance tips. moneymag.com.au…

PREPARE TO BE IMPRESSED. This year’s winners have been stress-tested by a pandemic and passed. They were prudent where they needed to be and spotted the opportunities where they could be found. There are three ways we recommend you use this guide. First, check out our banking and spending categories to find the best-value products. Thousands of dollars can be saved by choosing the right home loan. Second, if you are looking to invest, get to know our category winners. Particularly in view of the early access to super, make sure you are with the right fund and that your other savings are invested wisely. Finally, make sure you’re not paying too much for your internet and mobile phone plan. Thank you to Kenny McGilvary and WhistleOut (see page 130)…

GOLD WINNER PENDAL Listed property has hit a rough patch, but a sustainable cash flow will help it deliver good returns over the longer term Listed property funds provide investors with exposure to a professionally managed portfolio of publicly listed real estate investments. And rather than own the assets directly, investors buy into funds that manage the portfolio on their behalf. This asset class is having a hard time of it due to the coronavirus pandemic. But listed property is typically held for the long term, and over this time-frame it has performed well. The Pendal Property Securities Fund, this year’s winner, has returned 4.96%pa and 6.39%pa over three and five years respectively. It has a minimum investment of $25,000, a management fee of 0.65% and invests in property…

GOLD WINNER MACQUARIE In a highly volatile sector, investors benefit from consistent returns over time Small company (small-cap) stocks have inherently more growth potential than large-cap stocks that have hoovered up much of the existing market. The proof is in the pudding. The Macquarie Australian Small Companies Fund has managed to stay in positive territory during the coronavirus mayhem with a one-year return of 1.45%. The team at Macquarie Investment Management generates its returns by targeting quality companies bought at good prices through what it calls a “systematic approach”.…

GOLD WINNER MAGELLAN Well-chosen infrastructure can provide patient investors with solid returns Infrastructure investments have taken a big hit during the pandemic. But they are set to be one of the key areas to pull the economy out of the recession. The federal budget increased infrastructure spending by $10 billion, to $110 billion, over the next 10 years with a Covid-19 infrastructure package. This will have been music to the ears of listed real assets funds. The Magellan Infrastructure Fund (Unhedged) has improved on last year’s second place to top the table this year. “Whoever [would have] thought that many airports and toll roads would be empty of traffic,” says Gerald Stack, head of investments and head of infrastructure at Magellan. “As our investment universe comprises regulated utilities and…

GOLD WINNER PIMCO Investors who want to protect their purchasing power need to look beyond cash products With rates at historic lows, investors need to consider looking elsewhere to house their cash assets. Top spot this year goes to PIMCO’s Short-Term Bond Fund. It aims to preserve capital and return higher yield than cash investments through exposure to government, semi-government, corporate, mortgage and other fixed-interest securities. The fund is measured 50% against the Bloomberg AusBond Bank Bills Index and 50% against the Bloomberg AusBond Composite 0+ Yr Index. It has outperformed this blended index over one, three and five years. “We have seen growing interest in this type of product in recent times,” says Aaditya Thakur, PIMCO portfolio manager. While the barrier to entry is high, with a minimum…

Exchange traded funds (ETFs) have skyrocketed in popularity over the past 10 years. According to Vanguard Australia, Money’s Best ETF Manager for 2021, the Australian ETF industry has more than $71 billion in assets under management as at October 2020. ETFs provide investors with a liquid, mostly low-cost, diversified investment vehicle. For Vanguard Australia, these benefits drive the way it designs and constructs its products. “We only launch products that are fairly diversified, liquid, can be offered at a low cost, can generate a real return, and for us to have some level of assurance that they’ll be used appropriately,” says Balaji Gopal, head of the personal investor business at Vanguard Australia. “All this helps us avoid investing in short-term fads. “We start off looking at the problem that needs…

GOLD WINNER BETASHARES Global sharemarkets, in both developed and developing countries, can provide stunning returns even in the midst of a pandemic Exchange traded products (ETPs) have been a godsend for investors looking to diversify their portfolio with international exposures, which could previously only be done through a broker or managed fund. International ETP assets have risen 14% since the beginning of the year and now represent the largest slice of the Aussie ETP market. More than a third of all money invested in the space went to international ETPs. First place goes to the BetaShares Global Sustainability Leaders ETF. It has blown the competition out of the water with its one- and three-year returns of 26.31% and 21.48% respectively. It’s no surprise then that investors are flocking to…

C bus has retained pole position as the 2021 Best Pension Fund, for the second year running. It has been one of the most consistent pension funds, and is a lead performer across multiple asset classes. Cbus traditionally serves the construction sector, but other funds had better watch out: its upcoming merger with Media Super in 2021 will create a fund worth $60 billion. Cbus is a leader in sustainable investing, manages some of its funds in-house and is a market leaders in transparency. It is particularly renowned in the unlisted assets sector, as its in-house property funds management business is considered one of the best. This year the fund installed a new chief executive in Justin Arter, who was previously chief executive of the Victorian Funds Management Corporation, the…

GOLD WINNER AUSTRALIANSUPER Australia’s largest fund mixes and matches asset classes to achieve outstanding results This year has been a wild ride for members of default MySuper products, according to Rainmaker Information research: the highest product returned 3.7% over the 12 months to July while the lowest returned -4.8%. AustralianSuper has featured in the list of finalists through many categories in the Best of the Best awards. While this year its MySuper product wasn’t the highest performer, its returns over three, five and 10 years show consistent outperformance. Its fees are among the lowest in the category. The $190 billion AustralianSuper is an example of how a super fund gets better as it grows, says Alex Dunnin, Rainmaker’s head of research. “It’s a sharp performer across many asset classes…

GOLD WINNER HOSTPLUS An asset class that can smooth out returns is a reassuring investment during volatility Fixed interest isn’t glamorous, but it is an important part of any super fund’s engine room. Funds invest in fixed interest to smooth the returns they’ll earn through shares and property and to counter volatility, which at times like this can be very effective. It’s also important not to confuse bond yields (interest rates) with their capital return in this category. Bonds have a unique role. Hostplus consistently shows that even though it runs only a few hundred million dollars in bonds, it knows how to get maximum value year in, year out. Despite this strong performance, the industry fund is usually known for its growth assets, unlisted assets and private equity…

GOLD WINNER UNISUPER Sustainable investing has faced a big test and passed with flying colours UniSuper’s Sustainable High Growth fund shows that environmental, social and governance (ESG) products are not only garnering more mainstream attention, they’re outperforming their peers. UniSuper is a sharp super fund that is rarely far from the lead group. It manages 70% of its funds itself and is heavily committed to ESG principles. UniSuper, Equip and Vision Super are newcomers to the category this year, joining regulars Cbus and Aware Super to round out the top five. John Pearce, UniSuper’s chief investment officer, says he attributes the fund’s high performance to management by an internal investment team, focusing on listed assets with no allocation to alternatives. “Our sustainable options have been developed with our particular…

GOLD WINNER AUSTRALIAN ETHICAL This fund aims to make the planet a better place With Facebook posts that read, “Been with you for over 20 years … keep going!” and “I’ve invested with Australian Ethical for over 30 years and the investment returns have always been really good …”, it’s clear Australian Ethical has been successfully supporting longtime advocates. It was shortlisted as a finalist in two of our ESG categories – Best ESG Super Product and Best Australian Share ESG Fund – and we believe it deserves special recognition. “Australian Ethical Investment is the investment manager and super fund that showed most of the others how to do it. Without them, ethical and ESG investment in Australia probably would not have happened,” says Alex Dunnin, Rainmaker’s head of…

GOLD WINNER HESTA A commitment to sustainable investments is reflected in a strong performance HESTA makes its first appearance in the top five this year with its sustainable growth option. ESG (environmental, social, and corporate governance) products have tended to do well during Covid-19. According to HESTA chief executive Debby Blakey, sustainable returns have been outstanding this year and interest in ESG has increased. “Really it’s about driving the outcomes for members,” she says. “We speak very specifically about our purpose being to make a real difference to our members’ financial futures. We have a framework to measure each member’s outcomes and readiness for retirement.” HESTA recently launched a member portal, which has been a big help for members. It is digitising advice where possible. Other strong performers in…

GOLD WINNER CBUS Retirees with a higher risk tolerance can opt for higher potential returns Despite a subdued result in the high-growth area this year, returns from all our finalists remain strong over the three, five and 10 years. Cbus, Money’s Best Pension Fund for 2021, leads in the growth category too. Robbie Campo, group executive, brand, advocacy and product, at Cbus, says this is fantastic recognition for the fund because no matter what members are planning to do in their retirement, Cbus is there to support them. “With Cbus Super Income Stream – High Growth, our members benefit from strong longterm investment performance, competitive fees and helpful retirement planning services,” he says. As life expectancies increase super will need to last longer. Growth options may be suitable for…

GOLD WINNERS BANK BANKWEST NON-BANK COMMUNITY FIRST CREDIT UNION Punctual payers have a convenient, inexpensive way to stay on top of their spending Transactors represent those financially prudent among us who use their credit card for convenience, not to spend tomorrow’s income today. They always pay off their balances, often by direct debit. “Financial institutions have long offered recurring and automatic payment options on credit cards, including account alerts to help consumers manage their spending,” notes Community First Credit Union chief executive John Tancevski. We’ve landed with the same winners as those of the Best-Value Standard Credit cards category: Bankwest for its Breeze Mastercard and Community First Low Rate Credit Card.…

GOLD WINNERS BANK AUSWIDE MAJOR BANK BANK OF QUEENSLAND The number of free transactions and the annual fee are key considerations In this category, businesses that have more than $50,000 in their account balance at any given time benefit the most from choosing a Best of the Best finalist. This is the level where higher interest rates kick in. At the time of writing, Bank of Queensland customers could get 0.15%pa interest, which is much higher than the rate from less competitive banks, which can fall to 0.01%pa. (The top BOQ rate was 0.25% at the time of judging.) Here’s what to look out for when choosing an account. How many free transactions do you get each month? (Most institutions offer more than 10 but some banks will charge you…

GOLD WINNERS BANK BANKVIC MAJOR BANK BANKWEST NON-BANK NEWCASTLE PERMANENT For a higher interest rate, you need to stash away your savings for longer Term deposits that are locked up for longer than 24 months attract higher interest rates, which can be double those for short-term deposits. But they are designed to provide a specific outcome: a guaranteed interest payment after, say, five years. And the early withdrawal penalty is enough to put you off withdrawing the funds before they mature. Bankwest is our major bank winner this year. Its interest rate, the highest in the category, applies from a starting amount of $1000. Payments can be made monthly, quarterly, six-monthly or annually, although the amounts will differ based on the frequency you choose. As more account holders like to…

GOLD WINNERS BANK ME MAJOR BANK NAB NON-BANK MYLIFE MYFINANCE Account-keeping and monthly fees are a thing of the past for everyday banking This is where ME Bank takes pride in being the bank to beat. It has zero account-keeping fees and zero minimum deposits. It also refunds any transaction fee you incur when using an ATM. Among the major banks, NAB is this year’s winner. It is still the only major bank to offer zero monthly account-keeping fees with no conditions (such as minimum deposits) attached to an everyday transaction account, says a company spokesperson. Taking out the non-bank category again is last year’s winner, MyLife MyFinance. It requires no minimum balance or monthly deposit, nor does it charge monthly account-keeping fees.…

GOLD WINNERS BANK AUSTRALIAN MILITARY MAJOR BANK BANK OF QLD NON-BANK BCU Every dollar helps when it comes to maximising income in retirement Self-managed super funds have historically held more cash than a typical super fund portfolio so it makes sense to choose the best account to park your savings. This year, the top-performing savings accounts all provide fantastic base rates (1.15% or above), charge no monthly fees and, in the case of Australian Military Bank, for example, have optional extras such as term deposits (if you want to hold the funds in a higher-yielding account before you invest them elsewhere) and insurance. Bank of Queensland, which ranked second last year, is the winner in the major bank category with an account that has been designed specifically for SMSF customers.…

Firstly, thanks for such an informative magazine. I just have a couple of suggestions for future articles. 1. Rental property sales. There have been many articles on deductions for rental properties and all mention depreciation – such as building depreciation – but most neglect to mention that such deductions have to be considered when you sell the property and need to calculate capital gains. An article to address things that need to be included when working out capital gains (losses) would be useful so that appropriate records are kept.  2. Performance of portfolios. There are many published tables, articles and advertisements mentioning performance of shares, managed funds, trusts, exchange traded funds, etc. It would be useful to know how these are calculated so that individual investors can compare like with…

And now, the end is near, and so we face the final curtain … apologies to Frank Sinatra. We’re nearing the end of 2020 – a year that presented us with some big challenges. But like anything else, it too will pass. When I reflect back, I can see that as difficult as it was, 2020 made me take stock of what I’m fortunate to have in my life: savings, investments, a job, friends and family. It got me thinking about my super, too. I remember back in March, when the market went down, the first thought that popped into my head was, “What’s happening to my super?” In fact, it had dropped more than 20%. Even though I knew it would rebound eventually, I was afraid it might fall…

Should my partner and I purchase our first home as our primary residence? I’m 25 and my partner is 26; we have $80,000 in savings in the bank, as well as $10,000 invested in shares. My partner’s work supplies subsidised rent for us, leaving us paying $90 a week. We are living in a smaller country town, but would be looking to invest in a capital city. My partner works full time in education and I work FIFO in the mining industry. Do we buy an investment property this year or wait to purchase our primary residence first?…

Belinda Hutchinson University of Sydney chancellor; age 67; married to Roger Massy-Greene; she has four children and five grandchildren whom she regards as her greatest achievements. In her own student days women were a minority, whereas today they are the majority of graduates. She has a passion for learning, paddle-boarding and kayaking. Her reading spans books by friends in fashion to those who have the best scientific brains in the country. Favourite splurges are a coffee in the morning and a wine at night.…

When entertainer Celeste Barber set up her bushfire fund at the peak of the bushfires last year, she did it in the name of the Rural Fire Service (RFS). Her fund raised over $50 million for the charity, although it was later revealed that while the RFS was a worthy cause, donors weren’t aware exactly where their money was going. Instead of directly helping people who had lost family, homes and property, the registered charity for the donations was specifically the RFS. The lesson for us is that while we want to do the right thing, we need to keep an eye on where our charity dollars are going. Earlier in 2020, a study by the consumer organisation Choice revealed that some charities receive only around 10% of the money…

When should adult children move out of home? This is a question that parents often grapple with. There are many reasons why adult kids are living at home longer today than any other generation did. Even before Covid-19 “boomerang” adult kids were returning to the family home, but now the trend has sharply increased. Around 57% of men and 54% of women aged 18 to 29 lived with one or both parents in 2017, up from 47% and 36% in 2001, according to the long-running Housing Income and Labour Dynamics (HILDA) survey that tracks 17,500 people in 9500 households over almost 20 years. “Of course, the cost of housing is a big factor, and it’s been rising faster than inflation and incomes,” says Roger Wilkins, deputy director of research, and…

When I was at UBS Phillips & Drew stockbrokers in London, in 1985, we had a daily morning meeting with a room full of 200 equity dealers, and analysts would speak at a microphone. This “show” was as close to being a pop star as a nerd could ever get. One morning, the firm’s economist stood up and said: “Today is my last day working in the city and I have been racking my brain trying to think of something memorable to say in my last morning meeting that would mean I was remembered in perpetuity. “As a classically dull, boring and grey-haired old economist, this has proved to be a significant challenge because what could I possibly say now, having bored you for 50 years, that would be remembered…

The answer to the uncertainty is, of course, the same advice you’ll get in the good times: buy quality businesses, invest for the long term and ensure you have a diversified portfolio. The first company in that portfolio, though, should be as close as we get to genuine dividend royalty in Australia – our second-oldest company and one of the few that hasn’t cut its dividend even once over the past couple of decades and with a track record of long-term outperformance ... our Best in Breed income stock: listed investment company Washington H. Soul Pattinson.…

What was your first job? My first professional job, as the first mechanical engineering graduate from Monash University, was at General Motors (GM), in the drafting office as a trainee design engineer. It was something I really had no interest – or aptitude – in and both GM and I realised I was in the wrong place. I went on and taught engineering, but anything practical I had no interest in. I was much more interested in human beings and needed to know why we behaved in such odd ways. I went back to uni and studied psychology. I was also writing for the stage – I had to choose and luckily the plays started to take off at that time. What’s the best money advice you’ve received? Start a…

It’s no easy task to identify Australia’s best (and best-value) superannuation funds, managed funds, exchange traded products (ETPs), banking products and insurers. There were hundreds of product providers and thousands of products, choices and options to assess. Rainmaker Group, 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 for the Best of the Best awards. Rainmaker is also the publisher of the SelectingSuper website, The Good Super Guide and The Good Investment Guide. 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 each category was decided.…

FEAR AND GREED A daily business podcast started by journalist Sean Aylmer, it’s 20 minutes of all the main business news of the day. There’s a weekend extended edition that boasts guests from various backgrounds, including Alexander Hassall, chief executive of Your Financial Wellness; Megan Motto, chief executive of the Governance Institute of Australia; and Don Meij, Domino’s chief executive. SHE’S ON THE MONEY Hosted by financial adviser Victoria Devine, this is currently Australia’s number one money podcast. Put together by a team of financial advisers and accountants, it covers topics such as personal insurance, the rookie’s guide to investing, buying a home, the psychology of savings – all presented in an easy-to-understand way. SERINA BIRD – THE JOYFUL FRUGALISTA PODCAST Frugalista (someone who always looks fashionable, even on a…

GOLD WINNER HYPERION The world of digital disruption is proving fertile ground for a fund manager with an eye on the long term Domestic shares have always formed the backbone of Australian investment portfolios. Hyperion’s Australian Growth Companies Fund has blitzed the field this year, boasting a one-year return of 18.64% (to June 30), a three-year return of 12.45%pa and a five-year return of 12.52%pa. The one-year return is especially impressive, given the market volatility wrought by Covid-19. “2020 has been a challenging year to say the least, so being able to provide our clients with positive returns in their investment portfolios, especially when they may be experiencing financial losses in other areas, has been very motivating and rewarding,” says Mark Arnold, Hyperion’s chief investment officer and managing director.…

GOLD WINNER NIKKO The alternative to low-paying term deposits can provide an income without undue risk Fixed income has long been a key part of a sensible investment portfolio, providing income and diversification. But not all products are created equal. “There are now more options available to investors in the fixed-income space than ever before, but not all of them have the same benefits and risks,” says Darren Langer, portfolio manager at this year’s winner, Nikko Asset Management. “Particularly in today’s world of very low interest rates, and as more investors than ever head towards retirement, a strategy that can deliver income and returns at better than benchmark levels without introducing undue risk is as important as ever.” The Nikko AM Australian Bond Fund invests in a diversified portfolio…

GOLD WINNER LA TROBE FINANCIAL Both short- and long-term investors have been consistently rewarded This is a fund that has well and truly stood the test of time. For 12 consecutive years La Trobe Financial’s 12-month Term Account has won its category in Money’s Best of the Best awards. It gives investors exposure to the Australian property credit market through registered first mortgages. As at June 30, 2020, the fund held a strategic 2.5% in cash. It pays distributions monthly (currently at 4.5%pa) or you can reinvest for a compounded return at 4.59%pa. The fund caters for both short- and long-term investors. You can stay in it for one 12-month period or be automatically rolled over for a new term. SQM Research rates the fund a superior 4.25 stars.…

GOLD WINNER FIDELITY The ability to pick the winners is vital as the wave of new money chases riskier assets Since the GFC, quantitative easing has encouraged the flow of fresh money into riskier assets. This has led many companies in emerging markets to hold increased debt, so picking the winners is about capital discipline. The Fidelity Global Emerging Markets Fund invests in 30 to 50 companies with a track record of strong corporate governance. It aims to beat the MSCI Emerging Markets Index NR over a minimum investment horizon of seven years. It has returned 1.69%, 11.17% and 9.14% over one, three and five years respectively.…

GOLD WINNER iSHARES Increasingly cautious investors are putting their money into defensive assets to preserve their capital and diversify their portfolios Fixed-income exchange traded products (including ETFs) have stepped into the spotlight during the coronavirus, offering investors a way to hedge against volatility. But that doesn’t mean they’re not popular during other points in the business cycle. “Even before 2020, investors were cautious, piling $3.4 billion into fixed-income ETFs at the end of 2019,” says Chris Brycki, from the online adviser Stock-spot. “Behaviour like this signals a demand for defensive assets (like fixed-income ETFs) and many investors were probably feeling the rumblings of Covid-19 and an economic downturn.” Fixed-interest funds represented just 9% of the total Australian ETF market in September 2015, but pandemic fears have seen a flight…

GOLD WINNER TASPLAN Age-based investing is a good idea, but in practice only the best funds seem to succeed As regulators put pressure on super funds to create products to better serve members, lifecycle options provide the ability to have your super managed in a way that meets your risk appetite according to age. While the idea behind these funds is compelling, and sector leaders are impressive, many others have failed to deliver. Part of the issue is that some funds are caught up in the idea that super is a 70-year investment. “It should also be no surprise that the best lifecycle funds are those that run good funds anyway,” says Alex Dunnin, Rainmaker’s head of research. “If a fund has a poor track record, it’s not a…

GOLD WINNER QSUPER An investment strategy gets personal: it can be tailored to suit a member’s age and balance This award recognises MySuper products with the lowest fees ranked across seven benchmark account balances, from $1000 to $250,000. Michael Pennisi, chief executive at QSuper, our winner, says it works hard to keep its fees low so more money goes towards retirement savings. “It is during times of unexpected volatility like we’ve had this year where smart MySuper solutions are even more important,” he says. “QSuper has a relentless commitment to create a better future for our members, through the good times and the tough ones. Despite this year being so different, our purpose, our goals and our investment strategy remain the same.” Pennisi says the fund’s investment strategy provides…

GOLD WINNER REST SUPER Low fees are a great start for achieving strong long-term returns on your savings Topping our award for 2021 is Rest, the fund traditionally for retail workers. A repeat winner, it stands out with its fixed member fee of $68 and an administration fee of 0.1%. This indexed and balanced investment option has no investment fee and it shows how cheap a super fund can be if you choose the right investment option. This is the lowest investment fee in the category, and although AustralianSuper has a cheaper admin fee of 0.04%, it also has an investment fee of 0.14% and a member fee of $117. Average total fund fees are now around 1.3%, but the sharpest priced funds charge less than 1%. If you…

GOLD WINNER COLONIAL FIRST STATE Global technology and communications thrive in the work-from-home world This category looks at the range of investment choices offered by super funds. It usually covers a range of asset classes; however, this year it is focused primarily on global shares as the pandemic hit other sectors. The winner, from Colonial First State (CFS), concentrates on technology and communications, an area that benefited from the pandemic shutdowns. This year WA Super has moved up from fourth to third position and ANZ’s OneAnswer product comes second. The CFS product provided a one-year return of 25.87%, to retain strong double-digit returns over the three, five and 10 years. Only one of the other top five finalists returned double digits this year – AustralianSuper International Shares at 10.41%.…

GOLD WINNER LUCRF SUPER A wide-ranging charitable program improves the lives of many people who need support Australia’s oldest super fund, LUCRF, was the template for every modern industry super fund that followed and once again it is leading the field in innovation. This award is for its community program, which is unique in the sector. Set up in 2010, it is a registered charity and has grown to include 36 partners across 44 projects and has directly benefited 170,000 people. The program has four focus areas: basic needs, community building, skills development and health. Its activities include: • It delivers an average of 220 meals daily to needy people. • It runs a Soccer for All program in Brimbank, Victoria, aimed at helping migrants and refugees become involved…

GOLD WINNER AMG SUPER Cash may be a safe haven, but there’s a big difference between the best and worst returns A cash option is an important part of any superannuation portfolio, which is why this category was introduced for 2021. Choosing the right product is important, because when you compare the options in this field there is a difference of 0.9% over three years and 1.1% over five years to June 2020. Gold winner AMG Super, part of the DDH Graham Group, manages more than $1.2 billion on behalf of its 24,000 members. The fund offers its cash option as a single or multi-manager strategy. It runs via the Vanguard Cash Plus fund, which has consistently topped Rainmaker’s super performance tables. This option ranked first 10 times, and…

GOLD WINNERS BANK BANKWEST MAJOR BANK BANKWEST NON-BANK COMMUNITY FIRST CREDIT UNION Credit cards are hanging in there, thanks to good deals with low annual fees and rates Credit cards are increasingly falling out of favour, with regulations, debit cards, Covid-19 and the buy now, pay later boom all working to shift the landscape. Yet despite all this, they still command an entrenched place in our financial system. Their attractions include recurring and automatic payments options, including account alerts, plus convenience when travelling, says John Tancevski, Community First Credit Union chief executive. Community First Credit Union’s Low Rate card is this year’s winner in the non-bank category, while Bankwest has taken out the award for a bank with its Breeze Mastercard.…

GOLD WINNERS BANK BANK AUSTRALIA MAJOR BANK COMMONWEALTH NON-BANK AMERICAN EXPRESS Credit card users are reaping the rewards of the strong competition among providers Rewards cards are a great way to use your daily spending to save on goods and services. “Even with low- or no-fee products, customers want to feel like they’re receiving value,” says Austin Huntsdale, vice-president of lending at this year’s non-bank winner, American Express. “While the pandemic has meant temporary changes to our lifestyles, consumers still have an appetite for earning points,” he says. And with this growing appetite comes increased competition between providers such as the Commonwealth Bank. Its Awards Credit card is the winner in the major bank category.…

GOLD WINNERS BANK GREATER BANK MAJOR BANK NAB Look for a low interest rate and a high credit limit to help manage cash flow A business credit card should provide you with three things: a high enough credit limit to manage your daily expenses, an interest-free period to help you stay on top of your cash flow and low fees (or no fee if you spend at least $10,000 in any given month). Greater Bank wins the bank category this year, thanks to its super-low interest rate of 5.96%pa, which is less than half the interest rate charged by most credit cards in the market. It also comes with a 55-day interest-free period. While this is no longer as rare as it used to be, it’s still worth checking so…

GOLD WINNERS BANK MACQUARIE BANK NON-BANK CUA Aussies have been saving more in the recession, so it pays to shop around for the best place to keep your emergency funds Three in four Australians did not have enough savings when the pandemic hit, but if there is one silver lining from this crisis it’s that more people are drastically curbing their spending. According to the Australian Bureau of Statistics, the household saving rate more than trebled to 19.8% in June compared with just 6% in March. In its survey of more than 3000 Aussies earlier this year, comparison site Compare the Market found we’re also being more financially accountable. More than a third of respondents now have an emergency fund. On average they save 16% of their income and spend…

GOLD WINNERS BANK MACQUARIE NON-BANK CUA With rates on savings so low, customers are looking for the extra “bells and whistles” Online savings accounts have truly come of age. Bells and whistles such as direct debits, linked credit cards, savings goal calculators and budgeting tools are now part of the usual package. Macquarie Bank has given everyone a run for their money this year. Olivia McArdle, head of payments and deposits for Macquarie’s Banking and Financial Services Group, says it has seen a strong uptake of the product over the past six months. “We believe this has been driven by our competitive rates for savers as well as our market-leading digital banking offering,” she says. “We know from our conversations with our savings account customers that this product resonates with…

GOLD WINNERS BANK GREATER BANK MAJOR BANK BANK OF QLD NON-BANK CUA Saving and budgeting habits formed at a young age can have lifelong benefits Of all the savings account categories, it’s the children’s savers that have the highest interest rates. Greater Bank, our bank winner, gives its young customers more time to enjoy the high rates as the age requirement is capped at “under 25”, as opposed to other children’s savings accounts that are for those 18 and under. Bank of Queensland takes out the major bank award while the winner in the non-bank category, CUA, offers the highest interest rates this year with its Youth eSaver account.…