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Ben Inker
James Montier
Martin Tarlie
2022
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Investing for Retirement III: Understanding and Dealing with Sequence Risk

Sequence of return risk is entirely ignored in much of academic finance. But it is a meaningful risk for the vast majority of investment portfolios and there are useful tools that can mitigate its effects.

We believe a portfolio construction framework that takes into account the lifespan of the portfolio and its expected cashflows can account for sequence of return risk better than any standard single-period optimization. And by dynamically reallocating portfolios, portfolio managers can substantially further improve outcomes for their clients.

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Ben Inker
James Montier
Martin Tarlie
2022
Share

Investing for Retirement III: Understanding and Dealing with Sequence Risk

Sequence of return risk is entirely ignored in much of academic finance. But it is a meaningful risk for the vast majority of investment portfolios and there are useful tools that can mitigate its effects.

We believe a portfolio construction framework that takes into account the lifespan of the portfolio and its expected cashflows can account for sequence of return risk better than any standard single-period optimization. And by dynamically reallocating portfolios, portfolio managers can substantially further improve outcomes for their clients.

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