Buy-write could help keep boomers afloat
As an increasing number of retiring baby boomers find themselves battling a financial storm on two fronts in the search for high income while also managing longevity risk, buy-write strategies could provide them with the safe haven they require, according to Zurich investment specialist James Holt.
Speaking on the findings of Zurich’s latest white paper, The silver tsunami and the hunt for yield, Holt explained that high income was no longer attainable from traditional sources.
“Bonds once upon a time produced 8-10 per cent yield, but in recent times have produced only 4-6 per cent,” Holt said.
He said one strategy, still fairly new to the retail market, that may meet the financial needs of retiring baby boomers was the buy-write concept.
Essentially the renting out of shares with the option to buy, these investment strategies do not incorporate debt or gearing, and, according to Holt, produce much better returns than bonds with risk levels sitting halfway between that of bonds and equities.
Holt believes investors looking for income and long-term capital growth should allocate a substantial proportion of their portfolios to a properly modified buy-write strategy.
The Zurich Equity Income Fund implements a modified buy-write strategy that is actively managed to provide a target of 10 per cent per annum income, alongside downside protection and some long-term capital growth.
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
