Nanjing Night Net

From a host of worthy contenders, the stars of the banking sector have been revealed with the judges delivering their verdicts on the top performers in the financial sector.

This year’s Financial Review Smart Investor Blue Ribbon awards brought together the top performers in funds management, banking and insurance during the past year.

The best banking products are an important part of the annual awards and, for the third year in a row, Bankwest took out bank of the year, the major prize for lenders. It got the gong again thanks to the consistently good service it offers to customers across a range of areas.

The major awards went to Heritage Bank for mutual bank of the year, while Newcastle Permanent won the best building society. Rounding out the top awards were CUA for credit union of the year and UBank for best direct institution.

HOME-LOAN HEROES

Variable interest-rate loans remain the mortgages of choice for many borrowers who have benefited from lower rates in recent years.

That gives savvy borrowers the chance to get debt-free faster, by keeping their repayments at the same level.

NAB’s online subsidiary, UBank, took out the Smart Investor Blue Ribbon Award for its variable home loan on the back of no fees, unlimited fee-free redraws and a relatively low interest rate.

Fixed home loans provide certainty in that you can plan your repayments. V Plus Home Loans was successful in the fixed-loan category. The judges, from research service InfoChoice, found it consistently offered competitive fixed rates for terms up to five years. V Plus was also successful in the basic home-loan award.

The category recognises the fact some homebuyers do not want a mortgage loaded with features. Instead, they are looking for a no-frills product to service their needs.

What appealed to the judges about V Plus’s basic loan is its ability to offer a competitive product in terms of rates and fees. They claimed it had the lowest overall costs in the category.

PLASTIC FANTASTIC

When it comes to credit cards, the low-rate category was won by the Community First Credit Union. Its Visa credit card was successful through providing a low market rate, low annual fee and 55 interest-free days. That put it out in front for the judges in a competitive market.

But not every consumer wants a no-frills card in their wallet. The Commonwealth Bank launched its Diamond Awards program towards the end of 2010, and this year it was awarded a Blue Ribbon.

What struck the judges was its combination of generous features and rewards. The fact the rewards were slanted towards items that are sought by consumers was a telling factor in its high ranking.

Many financial institutions try to lure customers by offering a better deal than they might be getting from their present credit provider. ANZ and its First Visa product won the balance transfer credit card award due to a low 12-month balance transfer offer and annual fee.

That combination should help consumers looking to lower their credit card debt, InfoChoice says.

CASH CLUB

With interest rates falling, many investors have been worried by declining returns from their term deposits. But there are still good products in the market that offer reasonable short and longer-term interest rates.

Citibank won the Blue Ribbon award for best term deposit for periods between 30 days and 270 days. In the 360-day-plus category, the top product came from RaboDirect, which caters for both small and large investors.

CommSec Investment Account won the best cash management award. Judges were impressed that it gives investors a high interest rate but with no monthly fee.

Deeming accounts cater to people who are older than 55 and on a pension. People’s Choice Credit Union was assessed as the top product owing to an absence of account fees and a competitive interest rate.

NAB and its online subsidiary, UBank, had a good run in other deposit-related categories. NAB’s Classic Banking offering won the personal transaction account because it offers a long list of features without a monthly account-keeping fee.

UBank was successful in both the online and overall savings account awards. Its USaver product helps many investors save while at the same time offering flexibility and secure access options.

For full details of Blue Ribbon award-winners, including the top insurance and investment products, see the October issue of AFR Smart Investor magazine, on sale now.

Best money managers

MANY of the award winners in the funds-management industry not only had good recent performances, but could point to an established business approach that had produced success over many years.

Vanguard Australia took out the award for fund manager of the year due to its solid performance across various categories, as judged in co-operation with Morningstar.

Eligible retail funds must have Morningstar analyst ratings of gold, silver or bronze, high Morningstar star ratings representing a strong historical risk-adjusted performance, and they must have performed well over the year to May 31, 2012.

The managing director of Vanguard, John James, says it’s not its style to predict what is happening in the next few months in the markets. Instead, the fund manager has a deep commitment to its index approach, which means it tries to at least match the results generated by the various markets it tracks.

So if the All Ords rises 5 per cent one year, an index manager such as Vanguard will try to provide a similar return. But James says while that might sound straightforward, it requires years of discipline to implement effectively.

Vanguard focuses on providing good returns over time while keeping costs under control, he says.

Other fund managers to figure prominently in this year’s fund manager and investment categories were Russell, BT, Macquarie, Sandhurst Investors Mutual, Hyperion, Pimco EQT, SG Hiscock, Blackrock and Magellan.

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