2019 09 16 GARIEF returns image

Executive summary:

  • The Australian Government Treasury (Treasury) discussion papers on retirement income highlight the increasing focus on a more comprehensive risk assessment of retirement income products. 
  • The risk assessment considers the following factors:
    • the amount of periodic income the product would be expected to provide;
    • the likelihood that income may fall short of that expectation in a given period;
    • the degree of protection the product provides against the risk of running out of money; and
    • the level of access to the underlying capital or for lump sum withdrawals. 
  • For a product to perform well, judged by these factors, it will need to address market risk, sequencing risk, and liquidity. Products with risk mitigation strategies, protection factors, or conservative investment categories, create fewer downside variations and therefore will have lower risk scores. 
  • The Gyrostat Absolute Return Income Equity Fund (“Fund”) buys and holds ASX-20 shares with lowest cost protection always in place with upside.  Regular income at BBSW90 + 3% is delivered by passing through dividends. Gyrostat has for 34 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with our maximum draw-down 2.2% in any circumstances) always in place. 
  • With the evolution of our investment processes and raising the ‘hard’ quarterly risk tolerance from 2% to 3% (in February 2019) we anticipate returns in all market environments to exceed BBSW90 + 3% (enabling retirees to receive income and capital growth.)

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