Retirement Portfolio Resilience Perspective
Primary Pillar: Retirement Portfolio Construction
Supporting Pillars: Risk Pricing Discipline • Resilience Across Market Environments
This early edition of Gyrations examines why traditional portfolio construction approaches may become less effective under changing market conditions and explores the need for complementary portfolio construction approaches designed to improve resilience.
Viewed through today's Retirement Portfolio Resilience Framework, the enduring contribution of this publication is its recognition that retirement portfolio construction should evolve as market environments evolve. Rather than relying solely on traditional income and growth asset allocation, the publication explores how complementary portfolio construction approaches can reduce dependence on favourable market conditions through disciplined capital allocation and the commercial pricing of protection. While the investment terminology reflects the environment of 2016, the underlying architectural philosophy has remained remarkably consistent throughout the evolution of Retirement Portfolio Resilience.
This publication forms part of Gyrostat's historical research archive documenting the evolution of the Retirement Portfolio Resilience Framework.
In this fortnightly report we provide insights into risk management of an equity portfolio.
We detail global macro conditions (in pictures) with key upcoming data releases with market pricing of outcomes based upon the flow of money. Increased volatility is often experience around key data releases relating to interest rates, growht, inflation rates, and key political events. These dates are detailed in the report, along with market pricing of likely outcomes where available.
Our investment view is that interest rates will stay low for an extended period, and stock market volatility will increase.
With this view, traditional investment approaches are ill-equipped for today's climate. The traditional portfolio approach is to blend 'income' and 'growth' assets, which will produce portfolios with insufficient income and substantial fluctuations in capital value.
There is a need for risk managed investments in growth assets. Our unique approach is always a 'hockey stick' pay off profile, to participate in the upside with minimal capital at risk.
