POWERED BY MOMENTUM MEDIA
Liquid-growth strategy key to longevity
Supporting members as they transition into retirement may not be as hard as first thought, according to a new report which suggests funds can provide solutions using their existing retirement products.
The latest Rice Warner Actuaries’ Touchstone report suggests that super funds could be assisting their members by moving away from short sighted peer investment strategies into genuine long-term strategies that are linked to the objectives of the investment options.
While the report said there are many ways of doing this, it also said it was “easier to point out strategies which will not work than give examples of those which will”.
One suggestion was to use a ‘liquid-growth’ strategy, which involves splitting a retirees’ superannuation into two pools of money — one for liquidity and one for growth.
The liquidity pool, which would be invested in cash or similar assets, would be available to meet the drawdown amounts in the first two to three years of retirement.
The growth pool would continue to be invested in a long-term growth strategy, which would be similar to that deemed appropriate for the default strategy for accumulation members.
“The goal is to minimise the need for redemptions to be made from growth assets during market downturns, while keeping as high a proportion as possible invested in growth assets,” the report said.
As well as restructuring the default strategy to separate liquidity and growth requirements, Rice Warner suggests funds could undertake comprehensive member analytics to segment pre-retirees into homogenous groups in order to help them prepare for retirement, and they could provide tools to support individualised advice.
AUTHOR
Ashleigh McIntyre
Recommended for you
The super fund announced that Gregory has been appointed to its executive leadership team, taking on the fresh role of chief advice officer.
The deputy governor has warned that, as super funds’ overseas assets grow and liquidity risks rise, they will need to expand their FX hedge books to manage currency exposure effectively.
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
