CFS puts heatmap failures in context – 1% of 170 options

Mike Taylor

Managing Editor and Publisher

1 May 2023

Colonial First State has not been taking the failure of one of its superannuation investment products in the latest Australian Prudential Regulation Authority (APRA) heatmaps exercise lying down, giving financial advisers a letter to provide to clients explaining the issue.

In its letter to advisers, CFS is arguing that the CFS investment option together with two Perpetual investment options offered on the company’s FirstChoice platform “represent less than 1% of funds across the more than 170 options available on the FirstChoice platform”.

What is more CFS is claiming that two of the investment options have lately been posting improved performance.

The communication, signed off by CFS Group Executive, Distribution, Bryce Quirk, acknowledges that some media coverage named one CFS investment option and two Perpetual options offered on the FirstChoice platform.

“The three options highlighted represent less than 1% of funds across the more than 170 options available on the FirstChoice platform,” Quirk’s communication said.
“We’ve closely monitored the two Perpetual options and noted improved performance more recently, with both ahead of their benchmark over the three years to 31 March 2023. For the FirstChoice High Growth fund, performance is broadly in line with its benchmark over this period.”

“While there will be periods where some funds do not meet our performance expectations, we are pleased that CFS offers a wide range of high performing funds including more than 50 which delivered investment returns of more than 10% per annum over the last 3 or 5 years.”

“As part of their heatmap assessment, APRA also examined fees and costs and highlighted 48 products across the market that had significantly high administration fees. There were no Colonial First State funds highlighted as having high administration fees, underscoring the highly competitive fees offered on FirstChoice which are among the lowest in the market.”

“We will now undertake a further review of the options mentioned by APRA and consider if any changes should be made.”