Ensuring your retirement savings last

The Glacier Invest Real Income Solutions

Lehan Kruger, Portfolio Manager, Glacier Invest

The Glacier Invest Real Income and Real Growth Solutions were built to focus on reducing the two most important risks that living annuity investors face today. The risk of outliving your capital (longevity risk) and the risk of eroding your retirement capital if you retire when, or just after, there is a market crash, accompanied by the risk of timing drawdowns (sequential risk). Both are very real issues that retirees face. The solutions utilise a portfolio construction methodology that results in investment portfolios with asymmetric return profiles, to increase consistency and predictability of income for retirees.

By focusing on asymmetry, outcomes can be managed in a more predictable fashion while providing for enhanced compound annual growth rates. The Real Income and Real Growth Solutions aim to protect retirement capital during market downturns, while also enhancing returns by including alternative higher-return asset classes such as private equity and private debt in retail client portfolios. They are designed to incorporate non-traditional investment opportunities such as hedge funds, smoothing techniques and alternative investments.

The allocations to alternative asset classes not only provide greater diversification benefits but they also enhance portfolio returns. This allows investors to be invested in portfolios aligned to their return objective, but at significantly lower levels of risk compared to traditional long-only asset classes.

Characteristics of the Glacier Real Income Solutions

An asymmetric approach. The portfolio construction methodology and the wider range of uncorrelated assets included create an asymmetric return profile for the portfolio. Asymmetry means that the portfolio is constructed to provide more protection against market downturns but still capture most of the upside when markets rise. This asymmetry aims for higher compound annual growth rates and lower volatility, ensuring outcomes that are more consistent and reliable over the long term.

Diversification and return enhancement. The greater range of asset classes included in the solutions leads to greater diversification, as well as enhanced returns. Hedge funds aim to bring diversification to portfolios, smoothing aims to create more income stability and a reduction in volatility and alternative asset classes aim to boost returns. When combined into one portfolio, the addition of hedge funds, smoothing techniques and alternatives endeavours to promote lower drawdowns, less volatility and a more consistent income journey.

The Glacier Invest Real Income Solutions include wrap fund portfolios managed by Glacier Financial Solutions (Pty) Ltd, a Licensed Discretionary Financial Services Provider, FSP 770, trading as Glacier Invest. The Glacier Invest Real Growth Solutions are managed by Glacier Financial Solutions (Pty) Ltd. Sanlam Multi Manager International (Pty) Ltd FSP 845 is a Licensed Discretionary Financial Services Provider, acting as a Juristic Representative under Glacier Invest. As a Juristic Representative of Glacier Invest, Sanlam Multi Manager International (Pty) Ltd manages the retail investment solutions.