Chant West unveils lifetime product ratings

The research house has confirmed a new ratings offering dedicated to lifetime products, which it expects to see an increase in releases in coming years. 

Chant West has announced the launch of a new ratings service that assesses the quality of lifetime products, which pay super fund members an income for life.

According to the research house, the new service will use criteria to assess the features, fees, investments, and services provided and notably includes criteria that compare the projected outcomes of each product with the account-based pensions.

While it said that only a small number of funds currently provide lifetime products, Chant West believes that this number is set to rise in the next two to three years, driven by strong encouragement from Treasury and regulators.

As such, general manager Ian Fryer said that now is the right time to provide advisers with research on lifetime products using criteria focused on the reason why these products exist, in addition to assessing how well these products serve their intended purpose.

“The assessment of these products has taken some time, as we needed to develop a robust projection model that dealt with the range of benefits and features provided,” Fryer said.

“Our projection model enables us to assess how the outcomes provided through these products compare to an account-based pension, and also assess how well these products deliver lifetime income compared with other products.”

According to the general manager, there is also an important focus on what a provider does to help super fund members access the product.

These criteria differ depending on whether the product is primarily distributed through advisers or whether it is purchased by members from their fund without personal advice.

In a recent conversation with Super Review, Chant West’s senior investment research manager, Mano Mohankumar, said that the median growth super option had fallen around 3 per cent since late January amid market volatility resulting from Donald Trump’s unpredictable policy moves.

Namely, new data from the research house estimated that the median growth option (61–80 per cent growth assets) was down 3.3 per cent last week compared with late January.

However, Mohankumar said funds’ well-diversified portfolios should help cushion returns in the months ahead.

“Super funds are long-term investors and manage well-diversified portfolios that have their investment exposure spread across a wide range of asset classes, including meaningful allocations to unlisted asset classes,” Mohankumar said.

“That diversification helps cushion the blow during periods of market volatility and with about 55 per cent on average invested in listed shares, they’re able to capture a significant proportion of the upside when sharemarkets perform strongly – as we saw in each of the past two calendar years.”