Traditional assets not suitable for retirement: BetaShares

Traditional assets not suitable for retirement: BetaShares

Income-oriented investors in or nearing retirement should look beyond traditional asset allocation to manage risk, according to a new white paper from BetaShares.

The current low-growth environment coupled with market volatility has made bonds unattractive and standard equity asset allocation strategies risky, said BetaShares’ chief economist David Bassanese.

“The trade-off between investing safely and preserving one’s investment nest-egg versus taking on more risk in the search for higher returns is becoming much more acute. New challenges require new approaches,” he said.

Mr Bassanese warned that investors who are nearing drawdown run the risk of spending their investment capital to finance the cost of living.

“This prospect is a growing reality for Australians, due to rising life expectancy and lower returns on safer assets than in previous years. Cash, bonds and other defensive assets are delivering low returns,” Mr Bassanese said.

He also warned that through sequencing risk, volatile markets threaten to cause problems for those entering retirement.

“Volatility need not be a large concern for long-term investors who don’t need to access their retirement savings for several years, but for those in or approaching retirement this volatility matters greatly as it leaves them vulnerable to hard-to-recover-from equity market slumps early in their retirement,” Mr Bassanese said.

While a traditional asset allocation offered a good level of downside portfolio protection in the event of a market decline, Mr Bassanese cautioned that upside returns when the market rises would be “forgone” to a similar level.

He suggested that investors consider managed risk equity strategies to seek better returns than those of traditional asset allocation strategies, while also limiting the potential for downside losses.


Read more:

Westpac announces NZ$250m capital raising

Northern Trust hires former CBA analyst

Dealer group survey launched

Infrastructure can outpace 'low growth' world

Planning practice valuations reach 8-year high

Related Articles


Traditional assets not suitable for retirement: BetaShares
investordaily image
ID logo
promoted stories


Stephen Glenfield

FASEA appoints new chief executive


David Murray

David Murray commences new role as AMP chairman


Adrian Went

ANZ names new group treasurer



investordaily image

Super shouldn’t be a lottery

Tim Stewart

investordaily image

Can infrastructure equities cope with rising rates?

James Lydotes

James Swanson

Is this as good as it gets?

James Swanson