Super Investment Ratings
Super Investment Ratings are available to financial advisers only via Zenith Mosaic.
The table below summarises the super investment ratings tiers.
Where Chant West hasn’t rated an investment option, ‘No Investment Option Rating’ will be displayed in the Zenith Mosaic platform. However, the issuer of the investment option may have been awarded ‘overall’ Super and Pension fund ratings by Chant West, although these ratings do not reflect our rating of any of the individual investment options offered in those funds. Further information on ratings and investment option history is available upon request.
The table below shows Chant West’s investment option ratings criteria, along with their weightings.
Some of the factors considered when scoring each of the investment criteria are listed below.
Portfolio Structure and Design – investment philosophy, how the management team translates investment ideas and research into portfolios, level of diversification, glide path for lifecycle solution, consistency of portfolio performance with investment philosophy and risk/return objectives
Investment governance – having the right people being responsible for approval of the right investment decisions, Investment Committee with genuine investment expertise, clear investment decision-making matrix, appropriate delegations, additional governance for in-house mandates
Manager & asset research – quality/experience of both internal and external research resources (e.g. consultants/partners) and how they interact, manager coverage, manager/asset research process
Capital Markets Research – quality/experience of both internal and external research resources (e.g. consultants/partners) and how they interact, asset sector coverage, capital markets research process, how research feeds into decision-making
Past Investment Performance – performance relative to objectives and peer relative performance, with a focus mainly on the long-term (7 to 10 years) unless there have been recent significant changes
Portfolio Management Team – quality/experience of portfolio management team and asset consultants used for portfolio construction advice, and how they interact
Responsible Investment (RI) Integration – incorporation of RI into investment decision-making, engagement with investee companies and external managers, advocacy and transparency/reporting to members.
Portfolio Risk Management and Systems – quality of risk management systems, portfolio management data systems and risk reporting, liquidity management practices
Rating Process
Chant West conducts annual investment meetings with superannuation funds in order to understand the quality of their rated investment options. This is supplemented with in-depth desk-based research in order to assign an appropriate investment option rating. Meetings typically last between 3 and 5 hours. At least two Chant West Research staff attend all meetings.
Responsible Investment Classification System
Interest in Responsible Investing (RI) has increased materially in both product numbers and traction in recent years. While Zenith group including Chant West, believes that the increase in RI strategies is broadly a positive, we have observed that defining how investment managers and superannuation funds incorporate these practices into their methodologies is an industry challenge.
Zenith group believes that individual investors are best positioned to determine the portfolios that are most closely aligned to their beliefs and values. By creating additional tools to further identify an investment option’s approach to RI, we believe that investors will be able to make more well-informed investment decisions.
To this end, Zenith group believes that the first step in providing clients with increased RI insights is to create a robust classification system across managed funds and superannuation investment options. The aim is to create a uniform framework where investors can broadly understand how the investment manager or superannuation fund addresses RI themes and issues in their investment process.
There are five tiers within our RI framework. All investment options rated by Chant West receive an RI classification, noting that classifications are investment option-specific and do not extend to the broader organisation level of a superannuation fund.
Investment options in the Aware category broadly consider both RI factors and issuer engagement, but typically do so in a less structured and informal way.
Integrated investment options utilise RI as a key component of their security selection and portfolio construction approach. In addition, detailed and transparent issuer engagement is also treated as a fundamental component of the investment management process.
The Thematic and Impact categories are extensions of the Integrated classification, with both required to display a robust assessment of RI issues and formal engagement to be considered for progression. Thematic investment options invest specifically in themes or assets related to sustainability such as renewable energy, sustainable agriculture or affordable housing. While having many commonalities with Thematic investment options, Impact funds must also be aimed at generating a positive, measurable impact alongside a financial return with full transparency.
Our RI classification involves an assessment of three broad indicators:
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Does an investment strategy take into account RI and if so, to what extent is this embedded in the investment process?
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Are superannuation funds acting as active owners of securities?
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What is the extent to which formalised policies and procedures govern the integration of RI issues for the investment option?
To generate these outcomes, we rely on information derived during meetings with superannuation funds as part of our due diligence process as well as the provision of formal documentation from superannuation funds. We may also use external information from sources such as Principals for Responsible Investment (PRI). Classifications reflect an absolute view, not a peer-relative assessment.
The classification framework is underpinned by a set of principles which are overseen by an internal Responsible Investment Committee. We also use our role working right across the industry with a wide range of stakeholders to inform this framework and ensure it remains robust and relevant.
For more details on our RI classifications, please refer to our Responsible Investment Framework which can be found here.
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