The importance of sequence of returns risk is well understood.
The idea that the timing of returns can materially influence outcomes, particularly in retirement, is widely accepted in both academic literature and professional practice. At the same time, the structural characteristics of retirement portfolios are clear. Withdrawals reduce the capital base, and the ability to recover from losses is constrained. Industry research has increasingly acknowledged that traditional portfolio frameworks, while effective in accumulation, may not fully address the way risk is experienced in retirement.
These observations are widely understood.
However, they lead to a more practical question. If the risks are understood, to what extent are they reflected in portfolio construction?
