Industry super fund HESTA has launched a new retirement investment product that makes use of a glide-path strategy to reduce risks in the post-retirement phase.
The new option, called HESTA Income Stream, is designed to automatically reduce exposure to higher-risk assets over time.
HESTA investments and governance executive manager Rob Fowler said despite the fact the fund offered intra-fund advice services, few members sought advice when transitioning to a retirement option.
"Members often start their income stream without seeking advice, simply going into our default option," Fowler said.
The new option helps members de-risk their investments when they draw down from their assets.
The development of the new product was the result of the investment team taking over the management of the income stream options that were previously managed by Industry Fund Services.
The strategy combines HESTA Income Stream's balanced and defensive investment options.
On initial investment, 66 per cent of a member's funds are invested in the balanced option and 34 per cent in the defensive option.
Income stream payments are initially drawn from funds invested in the balanced option.
Once all funds invested in the balanced option are exhausted, income payments are paid from the defensive option.
As a result, exposure to growth assets, such as shares, is expected to decline slowly over the time a member is invested in the balanced and defensive options, until they are only invested in the defensive option.
Members joining HESTA Income Stream from 1 July 2012 can access this ready-made investment strategy, which is also the default strategy for new members who do not make an investment choice.
