Is 'natural' income the answer to the sequence of return problem?

Is ‘natural' income the answer to the sequence of return problem?

clock

One way of managing sequencing risk for income investors is to embrace ‘natural' income, but what does that mean? Mark Rimmer explains...

Recent articles in Professional Adviser have considered different opportunities and challenges for income investors, including the challenge of sequence of return risk. This is about the impact on a portfolio and its ability to deliver the required long-term outcome for investors, for example, income. A typical example used is the impact on capital values if people invest just before a period of significant negative returns, compared with investing just before a period of significant positive returns, even if the long-term annualised returns are the same. In the first case, there c...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Income

M&G launches fixed term annuity as it re-enters market

M&G launches fixed term annuity as it re-enters market

Fixed term of between five and 15 years on £10,000 minimum lump sum

Jenna Brown
clock 12 March 2025 • 2 min read
L&G reports record annuity sales of £2.1bn for 2024

L&G reports record annuity sales of £2.1bn for 2024

New business sales of annuities up 48%

Linus Uhlig & Jenna Brown
clock 12 March 2025 • 3 min read
Annuity rates surge again as market sees continued revival

Annuity rates surge again as market sees continued revival

Annuity rates see 70% increase compared to four years ago

Martin Richmond
clock 11 March 2025 • 3 min read