Press Release – Foresight Analytics & Ratings Reaffirms the SocietyOne Personal Loans Trust Rating as ‘VERY STRONG.’

Sydney, 9th May 2024 

Foresight Analytics & Ratings has recently completed a ratings assessment of the SocietyOne Personal Loans Trust.

The Investment Rating for the strategy has been retained as VERY STRONG. The Product Complexity Rating has been confirmed as COMPLEX.

A VERY STRONG rating indicates a very high level of conviction that the Trust can deliver risk-adjusted returns in line with its investment objectives.

Designation as a COMPLEX product indicates that the investment manager will seek to outperform their chosen specialist market sector, in this case, the Australian personal loan market. A key risk is the ability of SocietyOne to ensure the currency and integrity of its automated proprietary scoring system (algorithm) for loan applications. 

The Trust is a fixed-rate 12-month cash-like product designed to minimise any possible risk of underperformance. At the date of our review, the fixed rate of return for 12 months was 5.5%. The underlying portfolio of the Trust comprises unsecured personal loans and secured vehicle loans. The Trust is managed by SocietyOne Australia Pty. Ltd. (the Manager), which was acquired by the similarly-sized listed company MoneyMe Group in March 2022.

From a business perspective, SocietyOne has undergone material change over the last two years. In March 2022, SocietyOne was acquired by MoneyMe. But importantly, it was the higher quality credit assessment processes of SocietyOne that was universally adopted across the combined group. That is, the credit assessment processes that underpin the Trust have not changed and John Cummins, the Chief Investment Officer continues to lead the management of the trust. Pleasingly, the combined group is now back on a path of FUM growth.

The essence of the Trust is to deliver the target return with the minimal degree of underperformance. There are two key components of the manager’s strategy.

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About Foresight Analytics’ Investment Due Diligence Rating (IDD Rating) 

The objective of Foresight Analytics’ Investment Due Diligence Rating (IDD Rating) is to identify the best funds and opportunities for future investment. We assess the fund’s historical risk-adjusted performance compared to its peers to form a holistic view of the manager’s ability to deliver future returns. The IDD rating indicates the quality of the investment option within the context of a diversified portfolio and full investment cycle.  

 Foresight’s analysts use a 5-point scale to determine how the fund will perform against a range of risk factors.   

  • SUPERIOR indicates the highest level of confidence that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is highly suitable for inclusion on APLs.
  • VERY STRONG indicates a very strong conviction that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
  • STRONG indicates a strong likelihood that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
  • COMPETENT indicates the fund may deliver a risk-adjusted return in line with its relevant benchmark and that it may be suitable for APLs.
  • WEAK indicates the fund is unlikely to deliver a risk-adjusted return in line with its investment objective and that it is not suitable for most APLs.

A ‘Hold’ designation is applied to a fund’s rating if a material change impacts the fund manager, and we need to review the rating.  A ‘Sell’ designation indicates the Foresight Investment Ratings Committee considers risk factors to be elevated enough that maintaining an investment in the fund as part of their diversified portfolio is questionable.

Foresight Analytics Foresight Complexity Indicator  

A Foresight Complexity Indicator (FCI) highlights the complexity of an investment product based on a range of indicators. These typically include its terms and conditions, performance-based fees, liquidity structure, financial leverage, use of derivatives, rare and niche asset class/opportunity set, currency exposure and the level of transparency offered for investors. Foresight believes these factors can disproportionately affect riskadjusted return outcomes for investors even if a manager is very skilled. Investors can use FCI as a guide to portfolio position sizing within a diversified portfolio context. 

Picture-1 Press Release | Foresight Analytics & Ratings Reaffirms the SocietyOne Personal Loans Trust Rating as ‘VERY STRONG.’

 

Media Contact – Foresight Analytics

Jay Kumar 

Suite 208, 33 Lexington Drive, Bella Vista, 2153, NSW  

Telephone: 0408266713

Email: jay@foresight-analytics.com

Web: www.foresight-analytics.com

About Foresight Analytics 

Foresight Analytics, an independent Sydney- based firm, provides investment ratings, data analytics, assurance and advisory solutions to leading investment management companies, superannuation funds and wealth groups across the Asia Pacific.

Foresight’s innovative, evidence-based approach blends both human and forensic insights into the analyses of economies, markets, themes, investments products and portfolios. Foresight Analytics was founded in 2015 by Jay Kumar, a former executive of Morningstar, Optimix Investment Management, ANZ Wealth & Private Bank and the Reserve Bank of Fiji.

Foresight Analytics & Ratings platform provides investment and operational due diligence ratings on both public and private market strategies. Foresight has built its diligence niche in complex alternative assets, including domestic and international private credit investments.

For more information on our capabilities, please visit our website on www.foresight-analytics.com and social media platforms via LinkedIn, Facebook or Twitter.

For additional analyst insights, thematic research and market commentaries, please visit our website on www.foresight-analytics.com and streaming channels YouTube and Podcast.