Vertium Asset Management has told advisers that the unusually quick recovery from the December equity dip was unsustainable and could result in a protected recovery with possibly even another downward correction.
The equity income manager found that over the last seven sharemarket corrections, the average decline was 19 per cent with a recovery time of 1.4 years.
However, the one in December 2018 recorded a decline of only 11 per cent and a speedy recovery time of five months, which could result in the protracted recovery.
Vertium chief investment officer Jason Teh said that advisers needed to shield retirement portfolios from market corrections by lowering sensitivity to movements.
“An efficient way to achieve this is to allocate more to funds with low correlation to the market, so if the market declines, that portfolio is not fully tethered to the decline in capital values,” Mr Teh said.
Vertium is a Copia investment partner and its general manager of distribution, John Clothier, said financial adviser clients were becoming increasingly concerned about their retirement clients.
“Our financial adviser clients are increasingly expressing concerns about of a lack of attractive income options for retirees, as well as the likelihood of a pull-back in equity markets,” he said.
A solution was in a low risk income fund that had low sensitivity and lower volatility risk than that of the S&P/ASX 300 Index, of which there are options available.
Agree , Can obviously predict the future ??, Stop pushing your company , perhaps shut up and get the runs on the board , re Magellan , good returns equals happy clients and great inflows .What’s your returns like ? let us know rather than telling all advisers what to do .,IPO Wealth / thats for only ” sophisticated investors ” isnt it ?, you know like the loophole that Macquarrie tried to use before being found out by ASIC as problematic a few years back ??.
I hate so much about this article on so many levels: crystal ball gazing, insulting adviser intelligence, self-serving to the fund manager, the lack of critical commentary from the journalist (offer the opposite possibility that markets might do well and such a move might cost investors), use of the words ‘should’ and ‘needed’.
Message to Vertium: Fail. This article does more brand damage than good in my eyes as an adviser.
IPO Wealth are who we use for our clients…