Capstone Recommended List Users Guide – February 2011
Please Note: The Lonsec Recommended List continues to be Capstone’s Recommended List the Standard & Poor’s ratings are for comparison purposes only.
The following recommended list is to be used as a guide to compare the product ratings of Lonsec with the ratings Standard & Poor’s have assigned to the same product.
These ratings will be updated at the beginning of each month. No ratings on this document will be updated throughout the month, therefore we suggest you access the Lonsec website for the latest Lonsec ratings.
When a fund is not rated by Standard & Poor’s there will be an NR assigned in the Standard & Poor’s ratings column.
If you would like a copy of the Standard & Poor’s research for any of the products please email Carolyn Coverdale.
Ratings Definitions
Lonsec’s Rating Categories
Highly Recommended
The Highly Recommended rating indicates that Lonsec has high conviction that the fund or product can achieve its objectives and, if applicable, outperform peers over an appropriate investment timeframe. The manager or product has strong competitive advantages in people, process and product design and has no areas of material weakness. The investment is a preferred entry point to access this asset class or strategy.
Recommended
The Recommended rating indicates that Lonsec has conviction that the fund or product can achieve its objectives and, if applicable, outperform peers over an appropriate investment timeframe. The manager or product has a number of competitive advantages in people, process and product design. The investment is a recommended entry point to access this asset class or strategy.
Investment Grade
The Investment Grade rating indicates that Lonsec believes that the fund or product can achieve its objectives and, if applicable, outperform some of its peers over an appropriate investment timeframe. However, compared to higher rated managers / funds, this manager has fewer competitive advantages (and / or has a number of weaknesses) in people, process or product design. If available, higher rated funds or products giving access to this asset class or strategy are expected to provide better long term investment outcomes.
Hold
The Hold rating indicates that Lonsec has low conviction that the fund or product can achieve its objectives and, if applicable, outperform peers over an appropriate investment timeframe compared to higher rated funds. The manager or product has no competitive advantages (and / or has a significant number of weaknesses) in people, process or product design. It is not recommended that any new or additional investment be made into this product. If available, higher rated funds or products giving access to this asset class or strategy are expected to provide better long term investment outcomes.
Fund Watch
The Fund Watch rating indicates that it is not recommended that any new or additional investment be made into this fund or product. A significant change has occurred with the management of the Fund and a detailed assessment of the change is required and / or a series of rectifying actions are required from the manager before this rating can be changed. A Fund Watch rating may be a precursor to a ratings change and will normally be short term in nature.
Redeem
The Redeem rating indicates the Fund is no longer considered worthy of investment for any time period, and redemption (sale of units) should be made as soon as possible. An adverse development has taken place that is considered detrimental to the interests of investors.
Standard & Poor's Rating Categories
Five Star
Standard & Poor’s has very high conviction that the manager will consistently generate risk-
adjusted fund returns in excess of relevant investment objectives and relative to peers.
Four Star
Standard & Poor’s has high conviction that the manager will consistently generate risk adjusted
fund returns in excess of relevant investment objectives and relative peers.
Three Star
Standard &Poor’s has conviction that the manager can generate risk-adjusted fund returns in line
with relevant investment objectives and relative to peers.
Two Star
Standard & Poor’s has conviction that the manager will not generate risk-adjusted fund returns in
line with relevant investment objectives and relative to peers.
One Star
Standard & Poor’s has high conviction that the manager will not generate risk-adjusted fund
returns in line with relevant investment objectives and relative to peers.
On Hold
Issues potentially affecting the management of the fund have emerged, and the fund rating is temporarily suspended, pending clarification
Sell
A manager with significant issues that have the potential to adversely impact performance. Existing investors should consider obtaining advice regarding switching or redemption.
RATING / STANDARD
POOR’S RATING
Property Direct - Healthcare
Australian Unity Healthcare Property Trust / Highly Recommended / ****
Australian Unity Healthcare Property Trust - Class A Units / Highly Recommended / ****
Australian Equities Resources
EIM Emerging Resources Company Share Fund / Highly Recommended / NR
Diversified - Objective Based
Schroder Real Return Fund / Highly Recommended / NR
Equity Australasia
Mint Australia New Zealand Active Equity Trust / Investment Grade / NR
Property Direct - Other
Centro Direct Property Fund / Hold / NR
Centro Direct Property Fund International / Hold / NR
Property Direct - Retail
Charter Hall Direct Retail Fund / Recommended (Upper End) / NR
Property Direct - Diversified
Charter Hall Direct Property Fund / Hold / NR
Mortgage
Aust Unity Mortgage Income Trust / Hold / NR
Balmain (MMT) Mortgage Trust / Hold / NR
Balmain AQUA Income Fund / Hold / NR
Challenger Howard Mortgage Fund / Hold / Hold
ING Monthly Income Trust / Hold / NR
ING Mortgage Trust No. 2 / Hold / Hold
Perpetual's Monthly Income Fund / Hold / ***
AXA Australian Monthly Income Fund / Ceased Coverage / Hold
Mortgage High Yield
Balmain AQUA High Income Fund / Hold / NR
Mirvac AQUA Enhanced Income Fund / Closed-Wind Up / NR
Australian Unity High Yield Mortgage Trust / Ceased Coverage / NR
Australian Fixed Interest
Vanguard Australian Fixed Interest Index / Highly Recommended / ****
Aberdeen Australian Fixed Income Fund / Recommended / ***
BlackRock Indexed Australian Bond Fund / Recommended / ****
Colonial First State Wholesale Australian Bond Fund / Recommended / ****
Perennial Fixed Interest Wholesale Trust / Recommended / NR
UBS Australian Bond Fund / Recommended / ****
Tyndall Australian Bond Fund / Investment Grade / *****
Alternative Investments Direct Agribusiness
RFM Diversified Agricultural Fund / Fund Watch / NR
Alternative Income
Colonial First State Global Credit Income Fund / Highly Recommended / ****
Macquarie Income Opportunities Fund / Highly Recommended / ****
Acadian Quant Yield Fund / Recommended / ****
AMP Capital Corporate Bond Fund / Recommended / ****
AMP Enhanced Cash / Recommended / NR
AUI Vianova Strategic Fixed Interest Trust / Recommended / ****
BT Institutional Enhanced Cash Fund / Recommended / Hold
EQT PIMCO Wholesale Australian Focus Fd / Recommended / *****
Kapstream Absolute Return Income Fund / Recommended / ***
Perennial Cash Enhanced Wholesale Trust / Recommended / NR
Vanguard International Credit Securities Index (Hedged) / Recommended / ****
BlackRock Monthly Income Fund / Hold / ****
Colonial First State Income Fund / Hold / Hold
CFS MIF - Income Fund / Closed-Wind Up / NR
Alternative Income (High)
Bentham Global Income Fund / Recommended / ****
Franklin Templeton Multisector Bond Fund (I Class) / Recommended / NR
Goldman Sachs Enhanced Income Wholesale Fund / Recommended / ***
P.M. Capital Enhanced Yield Fund / Recommended / ***
Perpetual's Diversified Income Fund / Recommended / ****
Principal Global Strategic Income Fund / Recommended / ****
Goldman Sachs Income Plus Fund / Investment Grade / ***
UBS Diversified Credit Fund / Investment Grade / ***
AMP Capital Investors-Enhanced Yield Fund-Class A / Hold / NR
Basis Capital Yield Fund / Closed-Wind Up / NR
EQT High Income Fund / Closed-Wind Up / NR
Multi Manager - Alternative Income
Mercer Income Plus Fund / Highly Recommended / NR
MLC Diversified Debt Fund / Recommended / ****
Diversified Fixed Interest
Schroder Fixed Income Fund W Class / Highly Recommended / ****
Goldman Sachs Core Plus Australian Fixed Interest Fund / Recommended / ****
Macquarie Master Diversified Fixed Interest Fund / Recommended / ****
Aviva Investors Premier Fixed Income Fund / Investment Grade / ***
ING Diversified Fixed Interest / Investment Grade / ***
UBS Diversified Fixed Income Fund / Investment Grade / ***
Global Fixed Interest
EQT Pimco Global Bond Fund / Highly Recommended / *****
Aberdeen Global Government Bond Fund / Recommended / ***
BlackRock Indexed Global Bond Fund / Recommended / ****
BlackRock Wholesale International Bond Fund / Recommended / ***
Vanguard Hedged International Fixed Interest Fund / Recommended / ****
Amundi Global Diversified Fixed Interest Fund / Investment Grade / NR
Diversified - Capital Stable Tax Effective Income
Aberdeen Multi-Asset Income Fund / Recommended / ***
BlackRock Wholesale Managed Income Fund / Recommended / ****
ING Income Plus Trust / Recommended / NR
BT Monthly Income Fund / Fund Watch / NR
Diversified - Balanced Tax Effective Income
ING Tax Effective Income Trust / Recommended / ***
Divrsified - Capital Stable (max 40% growth)
ING Capital Stable Trust / Recommended / ***
MLC Index Plus Conservative Growth Portfolio / Recommended / NR
Perpetual Investment Choice Conservative Growth / Recommended / ****
UBS Defensive Investment Fund / Recommended / ***
Vanguard Wholesale Conservative Index Fund / Recommended / ****
Aust Unity Wholesale Conservative Growth / Investment Grade / NR
CFS Managed Investment Conservative Fund / Investment Grade / ***
Zurich Managed Investment Capital Stable Fund / Investment Grade / NR
BT Split Income Fund / Fund Watch / NR
BT Wholesale Conservative Outlook Fund / Fund Watch / NR
Multi Manager - Capital Stable
Advance Defensive Multi-Blend Fund / Highly Recommended / ***
BT Multi-Manager Conservative Fund / Highly Recommended / ***
Optimix Conservative Fund / Highly Recommended / NR
Russell Conservative Fund / Highly Recommended / ***
Russell Ventura Capital Stable Fund / Highly Recommended / ***
AMP Future Directions Conservative Fund / Recommended / NR
AXA Defensive Fund Multi Manager / Recommended / NR
Ibbotson Conservative Growth Trust / Recommended / NR
IPAC Diversified Investment Strategy No 1 / Recommended / NR
ipac Income Generator / Recommended / NR
MLC Horizon 1 Bond Portfolio / Recommended / ****
MLC Horizon 2 Capital Stable Portfolio / Recommended / ****
United Sector Leaders Capital Secure Fund / Recommended / NR
United Sector Leaders Capital Stable Fund / Recommended / NR
Colonial First State FirstChoice Conservative Fund / Investment Grade / ***
Colonial First State FirstChoice Defensive Fund / Investment Grade / ***
Pre-Select Conservative Fund / Investment Grade / ***
Custom Choice Conservative Portfolio / Closed-Wind Up / NR
Diversified - Balanced (41-60 % growth)
ING Balanced Fund / Recommended / ***
MLC Index Plus Balanced Portfolio / Recommended / NR
Perpetual Diversified Growth Fund / Recommended / ****
Vanguard Balanced Index Fund / Recommended / ****
Colonial First State Balanced Fund / Investment Grade / ***
Zurich Investment Series Balanced Fund / Investment Grade / NR
Multi Manager - Balanced
Advance Moderate Multi-Blend Fund / Highly Recommended / ***
Optimix Moderate Fund / Highly Recommended / NR
Russell Balanced Opportunities Portfolio / Highly Recommended / NR
Russell Diversified 50 Fund / Highly Recommended / ***
Russell Foundation II Portfolio / Highly Recommended / NR
AMP Future Directions Moderately Conservative Fund / Recommended / NR
AXA Alternative Balanced Multi Manager / Recommended / NR
AXA Moderately Defensive Fund Multi Manager / Recommended / NR
Ibbotson Balanced Growth Trust / Recommended / NR
IPAC Diversified Investment Strategy No.5 / Recommended / NR
MLC Horizon 3 Conservative Growth Portfolio / Recommended / ****
Summit Select Income Generator / Recommended / NR
United Sector Leaders Capital Balanced Fund / Recommended / NR
Colonial First State FirstChoice Balanced Fund / Investment Grade / ***
Colonial First State FirstChoice Moderate Fund / Investment Grade / ***
Pre-Select Balanced Fund / Investment Grade / ***
Custom Choice Moderately Conservative Portfolio / Closed-Wind Up / NR
Diversified - Growth (61-80% growth)
BlackRock Balanced Fund / Highly Recommended / *****
Schroder Balanced Fund W Class / Highly Recommended / NR
ING Active Growth / Recommended / ***
ING Managed Growth Fund / Recommended / ***
Maple-Brown Abbott Diversified Investment / Recommended / NR
MLC Index Plus Growth Portfolio / Recommended / NR
Perpetual's Investor Choice Balanced Growth Fund / Recommended / ****
UBS Balanced Investment Fund / Recommended / ***
Vanguard Wholesale Growth Index Fund / Recommended / ****
Aust Unity Wholesale Balanced Growth / Investment Grade / NR
Colonial First State Managed Investment Diversified Fund / Investment Grade / ***
Goldman Sachs Diversified Growth Fund / Investment Grade / NR
Zurich Managed Investment Managed Growth Fund / Investment Grade / NR
BT Active Balanced Fund / Fund Watch / Hold
BT Future Goals Fund / Fund Watch / Hold
Multi Manager - Growth
Advance Balanced Multi-Blend Fund / Highly Recommended / ***
BT Multi-Manager Balanced Fund / Highly Recommended / ***
Mercer Growth Plus Fund / Highly Recommended / NR
Optimix Balanced Fund / Highly Recommended / NR
Russell Balanced Fund / Highly Recommended / ***
Russell Foundation IV Portfolio / Highly Recommended / NR
Russell Ventura Growth 70 Fund / Highly Recommended / ***
AMP Future Directions Balanced Fund / Recommended / NR
AXA Balanced Fund Multi Manager / Recommended / NR
Ibbotson Growth Trust / Recommended / NR
IPAC Diversified Investment Strategy No 2 / Recommended / NR
MLC Horizon 4 Balanced Portfolio / Recommended / ****
United Sector Leaders Capital Growth Fund / Recommended / NR
Colonial First State FirstChoice Growth Fund / Investment Grade / ***
Pre-Select Growth Fund / Investment Grade / ***
Custom Choice Balanced Portfolio / Closed-Wind Up / NR
Diversified - High Growth (>80% growth)
ING High Growth Trust / Recommended / NR
Perpetual Split Trust Growth Fund / Recommended / ****
Vanguard Wholesale High Growth Index Fund / Recommended / ****
Aust Unity Wholesale High Growth / Investment Grade / NR
Colonial First State Managed Investment High Growth Fund / Investment Grade / ***
Zurich Investment Series Managed Share Fund / Investment Grade / NR
BT Split Growth Fund / Fund Watch / NR
Multi Manager - High Growth
Advance Growth Multi-Blend Fund / Highly Recommended / ***
Advance High Growth Multi-Blend Fund / Highly Recommended / ***
BT Multi-Manager Growth Fund / Highly Recommended / ***
BT Multi-Manager High Growth Fund / Highly Recommended / ***
Mercer High Growth Plus Fund / Highly Recommended / NR
Mercer Shares Plus Fund / Highly Recommended / NR
Optimix Growth Fund / Highly Recommended / NR
Optimix High Growth Fund / Highly Recommended / NR
Russell Foundation VI Portfolio / Highly Recommended / NR
Russell Growth Fund / Highly Recommended / ***
Russell High Growth Fund / Highly Recommended / ***
AMP Future Directions Growth Fund / Recommended / NR
AMP Future Directions High Growth Fund / Recommended / NR
AXA Growth Fund Multi Manager / Recommended / NR
AXA High Growth Fund Multi Manager / Recommended / NR
Fiducian Ultra Growth Fund / Recommended / NR
Ibbotson High Growth Plus Trust / Recommended / NR
Ibbotson High Growth Trust / Recommended / NR
IPAC Diversified Investment Strategy No 3 / Recommended / NR
IPAC Diversified Investment Strategy No 4 / Recommended / NR
MLC Horizon 5 Growth Portfolio / Recommended / ****
MLC Horizon 6 Share Portfolio / Recommended / ****
MLC Horizon 7 Accelerated Growth Portfolio / Recommended / ****
United Sector Leaders Capital High Growth / Recommended / NR
United Sector Leaders Diversified Aggressive / Recommended / NR
Colonial First State FirstChoice High Growth Fund / Investment Grade / ***
Pre-Select High Growth Fund / Investment Grade / ***
Custom Choice Growth Portfolio / Closed-Wind Up / NR
Custom Choice High Growth Portfolio / Closed-Wind Up / NR
Australian Equities - Large Cap
Arnhem Core Australian Equity Fund / Highly Recommended / ****
Ausbil Australian Active Equity Fund / Highly Recommended / *****
BT Australian Share Fund / Highly Recommended / NR
BT Core Australian Share Fund / Highly Recommended / *****
Fidelity Australian Equities Fund / Highly Recommended / *****
Integrity Australian Share Fund / Highly Recommended / ****
Integrity Wholesale Australian Share - No. 2 / Highly Recommended / ****
Perennial Growth Shares Fund / Highly Recommended / *****
Perennial Value Shares Fund / Highly Recommended / *****
Schroder Australian Equity Fund W Class / Highly Recommended / ****
Solaris Core Australian Equity Fund / Highly Recommended / ****
Solaris Core Australian Equity Fund (Perf Option) / Highly Recommended / ****
Acadian Australian Equity Fund / Recommended / ****
Alphinity Australian Share Fund / Recommended / ***
Aviva Investors Australian Equities Fund / Recommended / ****
AXA Wholesale Australian Equity Value Fund / Recommended / ****
BlackRock Indexed Australian Equity Fund / Recommended / ****
BlackRock Wholesale Australian Share Fund / Recommended / ***
BT Imputation Fund / Recommended / *****
BT Lifetime - Personal Super - Colonial First State Australian Sh / Recommended / ***
CFS Australian Share - Core / Recommended / ****
CFS Australian Share Fund / Recommended / ****
CFS Imputation Fund / Recommended / ***
CFS Realindex RAFI Australian Share - Class A / Recommended / ***
Concord Australian Equity Fund / Recommended / NR
Goldman Sachs Australian Equities Fund / Recommended / ****
Goldman Sachs Leaders Fund / Recommended / NR
Greencape Wholesale Broadcap Fund / Recommended / ****
Ironbark Karara Australian Share Fund / Recommended / ****
Northward Capital Australian Equity Trust / Recommended / ***
Perpetual Australian Share Fund / Recommended / ****
Perpetual`s Industrial Share Fund / Recommended / *****
UBS Australian Share Fund / Recommended / ****
Zurich Super Colonial First State PST Australian Shares / Recommended / NR
CFS FirstChoice Investment PM Capital Aus Share / Investment Grade / NR
IML (Sandhurst) Industrial Share Fund / Investment Grade / ***
IML Australian Share Fund / Investment Grade / ***
ING Australian Share Fund / Investment Grade / ***
Legg Mason Australian Value Equity Trust (Class A) / Investment Grade / ****
Zurich Investment Series Australian Value Share / Investment Grade / ***
BlackRock Scientific Australian Share Fund / Hold / ***
Australian Equities - Concentrated
BT Wholesale Focus Australian Share Fund / Highly Recommended / *****
Hyperion Australian Growth Companies Fund / Highly Recommended / ****
Solaris High Alpha Australian Equity Fund (Retail) / Highly Recommended / NR
Tyndall Australian Share Portfolio / Highly Recommended / *****
Alphinity Concentrated Australian Share Fund / Recommended / ***