Multi-asset research specialists, Scopic Research, have released a white paper following the firm’s research into retirement income strategies using invested pension pots.
The Retirement income champions and the safe withdrawal rate paper identifies a specific cohort of multi-asset income funds that Paul Ilott, Managing Director of Scopic Research, believes has been unfairly overlooked.
The white paper highlights what it terss ‘Retirement income champions’, a small cohort of open ended multi-asset income funds where the investment process has been specifically engineered with the aim of delivering a naturally occurring, base-line level of income, throughout the accounting year and then seeking to grow the total of income paid to investors every year to help offset the effects from inflation.
The white paper discusses how to identify ‘retirement income champions’ and how they can help to address sequencing risk. It also dismisses two misconceptions, firstly, that income yield is the same things as the income investors receive, and secondly, that capital volatility should be the only barometer of risk when using an income based strategy.
Commenting on how Scopic Research identified retirement income champions, Paul Ilott said: “Our research always focuses on seeking to understand the likely investment journeys of individual multi-asset funds under different market conditions, and this includes understanding their likely patterns of income. I’m not sure that we’d have uncovered our retirement income champion cohort otherwise. Our industry places a lot of emphasis on total returns but accurate and reliable data on income delivered is very hard to come by.
“Having initially identified two multi-asset income funds that we thought had the appropriate attributes as well as the processes in place to deliver an attractive income pattern for retirees, we then created our own checklist of requirements and approached fund management groups on a one by one basis – including conducting portfolio manager interviews – to see whether they met our criteria. Few do, which makes the cohort stand out from the peer group.”
The white paper is available for advisers and paraplanners to download for free from The Adviser Toolkit page on the Scopic Research website at: www.scopicresearch.co.uk.
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