Retirement products too tied to benchmarks
Retirement products should be designed around the end objectives of clients rather than trying to beat a certain asset class benchmark, according to the senior investment specialist at Aberdeen Asset Management Leanne Bradley.
“Products are often designed around benchmarks, and that benchmarks don’t necessarily meet the needs of investors,” Bradley said.
“I think the benchmark is less important in all asset classes. It’s more a combination of the asset classes and the weighting to those asset classes that have a bigger determination on the total return of a portfolio to a client,” she said.
Bradley also questioned whether the total return and total volatility that was adopted when following a benchmark return was suitable to the stage and risk appetite of a retiring client.
It was particularly important for clients in a retirement phase “with an uncertain time horizon” to be active in their asset allocation to minimise downside risk, Bradley said.
However, the market is still at a “crossroads”, and Aberdeen’s multi-asset income fund is sitting on a neutral strategic asset allocation as a result, Bradley said. 65 per cent is in fixed income and cash-related assets, with 35 per cent in high yield Australian equity and property portfolios, she added.
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