The institute's test involved establishing a set of criteria that included things such as performance, fund size, fees, staff continuity and access. All the funds on IPAC's database were then screened against these criteria. In the end Consumer declared only 21 out of more than 250 funds met its criteria.

Much of the concern has centred around the shallow nature of the "test" and the worry that Consumer readers will look at the list then go and buy those funds on the strength of the article.

Good Returns decided it would be interesting to compare all the funds on the Consumer list against the ratings and recommendations of the two retail managed fund research houses IPAC Securities and Morningstar.

The results were a mixed bag.

Two of the funds on Consumer's list are not recommended by IPAC, and three of the funds now fail the performance criteria set out in the test. To pass the performance hurdle funds had to have either a four star or a five star rating, however three of the funds, have only three stars.

Morningstar does not rate three of the managers with funds in the list and these managers account for more than half of the 21 funds. The other managers in the report have either a four or a five star rating from the firm.

On the product side there are four funds each with either a five or a three star rating, and two with a four star rating.

The conclusion from this is that some of the funds recommended by Consumer are only rated as around average by the research houses.

* IPAC does not make recommendations on NZ Funds products as it is an associated company
NYR = These companies and their funds have not been rated by Morningstar.