There is an alternative investment strategy for retirees wanting to manage their retirement income and not move out of the equity market, according to Macquarie Funds Group.
“For retirees who want to remain in equities, it is important to note that there are alternatives that can provide income, and not just capital growth,” Macquarie Funds Group portfolio manager Bruce Apted told InvestorDaily.
“There is an alternative that is slightly lower risk for them. It still carries with it market exposure but not the same degree of market exposure that a traditional long-only portfolio would have.”
The strategy involves an investment approach where the retiree can buy a portfolio of stocks, but can also reduce exposure to the equity market by having an option overlay, Apted said.
“Which will basically provide an additional source of income into the funds, and also provide a cushion to the down movement in the market,” he said.
“Volatility, as we know, has gone through the roof, and for most people volatility is a negative but for this strategy you can actually turn volatility into your friend… it can actually be a positive for you,” Apted said.
