Retiree income always with protection - ‘highly-defensive’
There is an increasing demand for retirement income products with protection and an acknowledged lack of product.
New products need to address market risk, sequencing risk and liquidity (Financial System Inquiry 2014, Retirement Income Disclosure Consultation Paper 2018, Deloitte Actuaries & Consultants 2019).
In the case of Gyrostat, we have protection always in place (this is now possible by using technology to identify volatility discrepancies for lowest cost protection) and dynamically manage these options with market moves.
This challenges the existing paradigm that protection always in place is too expensive.
Our solution is for retiree investors to simply add a defensive asset allocation which provides regular equity income (minimum BBSW90 + 3%) by passing through ASX-20 dividends with ‘hard’ protection always in place, including tail hedge for gains on large market falls.
By adding to portfolios this generates higher returns/income than cash/bonds/term deposits AND addresses longevity and sequencing risk (with 9 year track record of returns increasing with volatility and downside tail always in place.)