Abstract
In <b>Measuring Sequence of Returns Risk</b> from the Summer 2020 issue of <b><i>The Journal of Retirement</i></b>, authors <b>Andrew Clare</b> (of <b>Cass Business School</b>), <b>Simon Glover</b> (of <b>ITI Group</b>), <b>James Seaton</b> (of <b>Solent Systematic Investment Strategies</b>), <b>Peter Smith</b> (of the <b>University of York</b>), and <b>Stephen Thomas</b>(of <b>Cass Business School</b>) demonstrate that the timing–not just the amount–of investment returns can be vitally important to investors’ retirement income prospects. Major losses right around one’s retirement date are much more damaging than those that happen long before or after retirement. Popular investment vehicles like target-date funds (TDFs) have not protected against sequence risk, so investors need a different strategy. The authors find that a simple stock/bond asset allocation combined with a trend-following strategy for the stock portion (switching assets between stocks and government bonds, based on current market trends) greatly reduces sequence risk and minimizes the chances that retirees will run out of money or need to withdraw less from savings each year. The authors also offer ways to measure how well different investment strategies protect against sequence risk. <b>TOPICS:</b>Volatility measures, downside-only measures, performance measurement
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.