Asset management approach tweaked for retirees

3 July 2014

| By Kate Cowling |

Innovators in the post-retirement space are experimenting with asset management styles to move retirees away from wealth accumulation and towards income, according to a Mercer report.

Acknowledging the ageing population and demand for innovation in the post-retirement space, the market is responding with products predominately tailored to managing longevity risk, the Mercer Market Trends Report shows.

“Whether it be a focus on income, tax effectiveness or loss aversion we are seeing many product providers innovate to develop investments that are deemed attractive for retirees,” the report said.

Among them are tail risk hedging, managed volatility and absolute return-focused products.

“These innovations mean that an accumulation and post-retirement option may have the same high level strategic asset allocation, but look markedly different in terms of the underlying investments and asset management styles.

“However, we expect to see more broad based innovation as the industry continues to recognise that investment solutions alone are unlikely to adequately arm most members against the risks they will face in retirement,” it said.

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