Wednesday, 28 October 2015

The risk of de-risking your investment portfolio nearing retirement

FinaMetrica’s analysis of 45-year portfolio history shows that the financial services industry has overstated sequence risk to investors. Advisors who have 'de-risked' older investors' portfolios by reducing the asset allocation to equities have cost their clients money in retirement.

This podcast discusses FinaMetrica’s non-intuitive findings from research into sequence risk. Essentially, over the past 40-plus years investors would have had more money available to them in retirement if they had maintained higher equity exposures in their retirement portfolio, except in 5% of cases where there is no difference in outcomes.

The data shows that the industry is overstating sequence risk to clients and de-risking portfolios, when they should be focused on choosing a portfolio consistent with their risk tolerance and taking a sustainable level of regular withdrawal.

http://www.riskprofiling.com/blog/October-2015/sequenceriskbeatup


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Friday, 23 October 2015