Retirees need inflation protection

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Unpredictable markets are leaving investors nervous and unsure where to turn to.

That’s according to MLC Chief Investment Officer Jonathan Armitage, who says traditional diversified funds aren’t delivering the returns that retirees need. For these clients, the timing of losses is critical, because a loss close to retirement can have a significant impact on their future income.

“Retirees need an investment fund which controls risk and avoids significant drawdowns, while also having the capacity to generate the returns needed to support their lifestyle in retirement,” said Armitage.

In an attempt to address these challenges, MLC has launched new actively managed portfolios, which aim to give retirees peace of mind and returns above inflation.

While headline inflation is quite benign at the moment, Armitage says that there are plenty of sectors where prices are going up faster than that headline inflation, particularly around things like healthcare. Inflation is acting like “a tax on people’s investment savings”, he says, so these portfolios are designed to deal with that.

“Our approach to managing risk is different to our competitors. The ability to track future risk, return and diversification using our scenarios framework is unique to our process. It is also key to ensuring consistent risk control and higher reward for risks taken,” said Armitage.

MLC Wrap is now offering the three investment portfolios:

  1. MLC Inflation Plus – Conservative: Most suitable to the risk averse and those already in retirement
  2. MLC Inflation Plus – Moderate: Most suitable for the risk aware and those in the pre-retirement phase
  3. MLC Inflation Plus – Assertive: Most suited to the risk tolerant and those in the accumulation phase

The assertive fund has existed for more than 7 years under a different name – long term absolute return – so this is not a new concept for MLC. Armitage says that the product has been tested in pretty tough times, including through the GFC, so MLC is confident that they have the expertise to make this type of product work.