Lehan Kruger, Portfolio Manager at Glacier Invest
The Glacier Invest Real Income and Real Growth Solutions have been built to focus on reducing the two most important risks that living annuity investors are facing today.
The risk of outliving your capital (longevity risk) and the risk of eroding your retirement capital if you retire when, or just after, there is a market crash, accompanied by the risk of timing drawdowns (sequential risk) – are very real issues that retirees face.
The solutions have been constructed and designed in such a way that they are able to increase consistency and the predictability of income for retirees. This is done by utilising a portfolio construction methodology that results in investment portfolios with asymmetric return profiles.
By focusing on asymmetry, outcomes can be managed in a more predictable fashion while providing for enhanced compound annual growth rates. The Real Income and Real Growth Solutions aim to protect retirement capital during market downturns, while also enhancing returns by including alternative higher-return asset classes such as private equity and private debt in retail client portfolios.
They are designed to incorporate non-traditional investment opportunities such as hedge funds, smoothing techniques and alternative investments. The allocations to alternative asset classes not only provide greater diversification benefits but they also enhance portfolio returns. This allows investors to be invested in portfolios aligned to their return objective, but at significantly lower levels of risk compared to traditional long-only asset classes.
Using this outcomes-based approach, potential living annuity investment portfolios can be categorised based on their volatility and drawdown profiles.
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