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 Future Fund’s CIO Ben Samild has announced his resignation, with his deputy to assume the role of interim CIO.
The fund has unveiled reforms to streamline death benefit payments, cut processing times, and reduce complexity.
A ratings firm has placed more prominence on governance in its fund ratings, highlighting that it’s not just about how much money a fund makes today, but whether the people running it are trustworthy, disciplined, and able to deliver for members in the future.
AMP has reached an agreement in principle to settle a landmark class action over fees charged to members of its superannuation funds, with $120 million earmarked for affected members.
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(%)
