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Bendigo SmartStart Super

THIS NEW SUPER FUND WILL ALLOW PEOPLE TO MIX AND MATCH INVESTMENT OPTIONS AND WILL APPEAL TO THOSE WHO ARE COST CONSCIOUS, REPORTS BARBARA DRURY.

THIS NEW SUPER FUND WILL ALLOW PEOPLE TO MIX AND MATCH INVESTMENT OPTIONS AND WILL APPEAL TO THOSE WHO ARE COST CONSCIOUS, REPORTS BARBARA DRURY.

What it is: Bendigo SmartStart Super is a simple, low-cost fund offered by the new wealth division of Bendigo and Adelaide Bank.

SmartStart Super serves up an investment menu of five passive index funds and five actively managed funds chosen to match different risk and return profiles, from defensive and conservative through to balanced, growth and high growth. It also has a life-stage default fund for those who want to set and forget their investment strategy, as well as insurance and commission-free financial advice.

How it works: Investors can mix and match their own managed funds or opt for a default fund designed for their age and life stage. Life-stage funds progressively reduce investment risks (and returns) as you age.

The head of funds management at Bendigo Wealth, Richard Morice, says SmartStart's age-based defaults centre on three risk profiles linked to a member's age. Once you choose this option, your savings will be automatically transferred into the pre-determined asset mix as you age.

If you are under 55 your contributions go into the growth index fund with a heavy emphasis on shares and property.

When you turn 55 your money will be switched automatically to the balanced index fund and from 60 you will be transferred to the conservative index fund with a mix of mostly cash and bonds. Members can opt in or out of the age-based defaults as they become more or less engaged with their super.

What it costs: Members are charged a flat administration fee of $98 a year, irrespective of the amount they have invested. You will also be charged management fees for the investments you select. Index funds are cheapest at 0.39 per cent to 0.46 per cent a year, while actively managed funds cost 0.6 per cent to 0.99 per cent.

There are no fees for contributions, withdrawals or switching between investments. Financial advice is optional and charged on a commission-free, fixed-dollar basis.

A research analyst at SuperRatings, Nicole Ross, has compared the fee structure with comparable products for account balances of $5000, $50,000 and $100,000. She found that the index options, which also form the basis of the age-based defaults, offer "good" value for money for small accounts and "excellent" value for larger accounts.

The actively managed fund options were also rated as "good", while the defensive and conservative active options offer "excellent" value for larger balances. SuperRatings also compared the TPD and income-protection insurance against the industry average in terms of coverage per dollar of premiums paid.

There are marked differences in value for money for men and women of different ages and occupations, so members need to crunch their own numbers. For example, the death and TPD coverage offers above-average value except for younger men, which is below average.

By comparison, income protection offers above-average value for people in their early to mid-20s. For anyone older it provides only average value for men and below-average value for women.

Pros: Morice says SmartStart is aimed at people aged 20-50, from young people building their careers and super to older people who want to consolidate their super into one simple, low-cost fund. The initial focus is on the bank's 1.4 million branch customers.

Ross says SmartStart is a straightforward product with an easy-to-read product disclosure statement. While not the cheapest product in its category, it is competitive. "It is an improvement on Bendigo's previous [super] products and the death and TPD insurance is looking good," she says.

While the age-based default is a good ready-made solution for people who don't want the bother of choosing their own investments, Ross says SmartStart is also value for money for people with higher super balances.

Cons: The investment menu is restricted to managed funds. While limited choice reduces costs and aids simplicity, it does not suit everyone.

For example, Ross says many funds allow members to invest in shares from the ASX top 200 companies. If you want to buy shares, property or other direct investments and make your own decisions, this is not the fund for you.

Where it fits in: Financial institutions are all racing to bring simple, low-cost products to market ahead of the government's proposed MySuper reforms. Bendigo's SmartStart, IOOF's Pursuit Focus and Asgard's Infinity eWrap were all launched in the past month. They join established products such as BT Super for Life, AMP Flexible Super and OnePath Frontier (which Ross says is not so simple but low-cost).

"SmartStart is suited to those who are cost-conscious and want something that is inexpensive, simple and transparent," Morice says. "Our ready-made diversified funds offer that with comprehensive insurance."


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