In his latest 'better business' column, Brendan McCurdy explains why investors need to understand the role of risk in determining a portfolio's potential to distribute income over time - and the opportunity this offers for advisers to add value
How can income-oriented investors help their portfolios last longer and distribute more total income? In this endeavour, reducing portfolio risk is more important than investors may realise. Lower overall portfolio risk can help portfolios last longer - and portfolios that last longer have greater potential to distribute cash over time. Let's explore in detail the link between lower volatility and portfolio longevity. At Goldman Sachs Asset Management, we used historical data to construct 100,000 potential 30-year investment horizons for portfolios with similar returns, but different ...
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