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[ PLATFORMS & PENSIONS ]
structure of the fund has changed so
you have more invested in safer, low-
risk holdings that won’t spring back
like their higher-risk/return cousins.
Understand the benefits
of risk in retirement
Now we are expected to live for
so much longer, is there any need
to reduce your risk after you stop
working? With around 30 years of
retirement to budget for, most people
in the UK need to squeeze as much
from their pension pot as possible and
benefit from as much upside as they
can lay their hands on.
If you have saved enough for your
retirement, you may want to preserve
your wealth and take less risk, but
for the majority of people on limited
pensions, which aren’t as big as they
hoped, there is time to go for growth.
Look at new portfolios that
protect against sequencing risk
A number of groups have begun to
launch investment products that
actually have a practical purpose. One
day, I’m sure we’ll laugh about how
funds were designed – as complex
jigsaw pieces we had to select and put
together to create our own portfolio.
Soon though, I’m expecting fund
managers to come up with solutions
that manage the asset allocation
TRUSTNET
The “manual” approach
is to keep cash and use it
when the market is down,
but this isn’t as elegant
as a portfolio designed to
grow while the markets are
good and protect on the
downside in crash scenarios
of funds and deliver us low-cost
portfolios that serve to meet a goal.
In this instance, we could really
do with portfolios that mitigate the
downsides of sequencing risk for
people in or approaching retirement.
The “manual” approach is to keep
cash and use it when the market is
down, but this isn’t as elegant as a
portfolio designed to grow while the
markets are good and protect on the
downside in crash scenarios.
Cass Business School has been
working with a firm called Whole
Money to bring its sequencing risk
research to life and together they have
launched some portfolios that should
limit downside risk.
Other fund houses should bear in
mind people who are non-advised
would welcome innovation around
fund solutions, rather than persisting
with old-fashioned fund structures
that seem hell-bent on keeping
private investors mystified.
trustnet.com