Money Magazine's Best of the Best Expert Panel

How we chose our winners – and who helped

Money’s annual Best of the Best edition is months in the making and involves a lot of hard work, not only by the Money team but the experts from various companies who help us come up with  winners in all of the categories. Over the next few pages you’ll get a better idea of how we chose the winners and learn more about our experts.

Investing Awards

• Managed Funds

We teamed up again with three research houses to come up with the best managed funds – InvestorWeb, Morningstar and Standard & Poor’s.
We asked all three research houses to tell us their highest-rated funds (no less than four stars from Morningstar and Standard & Poor’s and five stars from InvestorWeb – they rank between one and six stars) in a number of categories.
In three categories – balanced, property securities and small companies – we had to go down to three stars from Morningstar and Standard & Poor’s and four stars from InvestorWeb.
Funds qualified only if they were retail, open to new investment and had a minimum initial investment of $25,000 or less. Funds where then ranked according to a points system. For example, a five-star fund from either Morningstar or Standard & Poor’s or a six-star fund from InvestorWeb scored five points, while four stars from either Standard & Poor’s or Morningstar or five stars from InvestorWeb scored four points.
If a particular fund was rated five stars by Standard & Poor’s, five stars by Morningstar and six stars by InvestorWeb, we added the appropriate points – 15 points in this case. In some cases there were equal placegetters. We then applied a further filtering process to come up with our final list of best funds.
Morningstar provided the fund data for the tables. Returns are to October 31, 2006.

• Best Fund Manager

The Best Fund Manager was chosen by allocating points based on our individual manager fund categories. Fund managers were awarded five points for every gold win, three points for every silver win and one point for winning bronze.

About the experts

InvestorWeb Research is part of the listed IWL group and has developed into one of the pre-eminent managed funds research providers. An in-house research team of eight analysts offer recommendations on more than 1000 managed funds and structured products and 200 stocks. InvestorWeb Research also provides recommendations, approved product lists, specialist asset allocation advice and various other services to over 1000 financial planners around the country. See http://www.investorweb.com.au/.

Morningstar is an independent research house and provider of managed investment data. It launched its star ratings system seven years ago to “provide a quick, easy way to initially identify quality funds”.
The one to five-star system gives investors a recognisable pointer to which funds Morningstar believes are good quality, and which aren’t. Morningstar’s star ratings are based on assessment of a fund’s risk-adjusted performance. A fund that has consistently produced higher risk-adjusted returns than its peers gets a higher star rating, while funds that have consistently produced lower risk-adjusted returns than their peers get the lower star ratings.
Morningstar recalculates and republishes the ratings each month and you can find these on the website http://www.morningstar.com.au/.

Standard & Poor’s has assigned credit ratings to cash and fixed-interest funds in Australia since 1989. It also manages Australia’s leading equity market indices – the S&P/ASX indices. It provides a wide array of services including fund ratings on more than 1100 funds; access to one of Australia’s largest data bases of managed fund data, and the S&P Market Share Report. You can find more information at www.standardandpoors.com.au/funds.