Model portfolio provider FE Investments has launched a new range of portfolios designed for financial advisers to help their clients in the decumulation phase of their investment journeys.
In recognition of the different risks that decumulation clients face, the range includes two new portfolios, the Initial Income Retirement Portfolio and the Long Term Retirement Portfolio.
The Initial Income Decumulation Portfolio aims to protect investors from sequencing risk, where a large fall in the markets early in retirement significantly devalues investments, from which they may never recover. The portfolio is designed with capital preservation as a primary concern, with a low correlation to equity markets, which are among the highest risk investments.
The Long Term Retirement Portfolio meanwhile aims to protect investors against shortfall risk, where an investor runs out of money during retirement. The portfolio aims to grow capital in the short term via exposure to equity markets and then subsequent long term growth over an extended period.
Toyosi Lewis, Retirement Investment Specialist at FE Investments, says: “Having the right decumulation strategy in place for clients has never been more important for financial advisers. Many clients are still relying on accumulation solutions to manage drawdown, which don’t mitigate against the different risks they face in retirement.
“Be it longevity or sequencing risk, advisers need to play an important role in helping their clients in decumulation to think differently about the risks they will face. Our decumulation portfolios are designed to mitigate these risks and help advisers satisfy their clients’ retirement objectives and tackle the twin challenge of income sustainability and sequencing risk.”
The decumulation portfolios are the latest range to be offered by FE Investments as it builds out its MPS offering to serve an increasingly diverse range of clients. The decumulation portfolios will sit alongside its Hybrid, Mosaic, Responsibly Managed and Income portfolios, each of which apply FE Investments’ risk-adjusted approach and are backed by leading fund data provided by FE fundinfo.
The portfolios will be available initially on the following platforms – abrdn wrap, 7IM, AJ Bell, Aviva, Embark, Hubwise, Praemium, Quilter and Transact.