The Glacier Invest Living Annuity Income Solutions is comprised of collective investment scheme (CIS) funds (65%), hedge funds (10%), and a smooth bonus fund (25%), known as the Multi-Manager Smooth Growth Fund. Alternative investments will be added in due course.
The solutions use an asymmetrical return approach, which simply means minimising downside risk and capturing as much of the upside as possible. This approach is designed to reduce volatility in returns while preserving capital. The smoothing mechanism is used to smooth out the volatility over time, while the addition of hedge funds adds to performance.
Because hedge funds have a low correlation to other asset classes, they will tend to outperform when other asset classes are struggling. This will help to cushion the portfolio when markets are falling.
Coupled with this, the smoothing technique used holds back excess returns when markets are high and releases these amounts back to investors when markets pull back. This means the investor will see less volatility over longer periods of time.
There are five Income Solutions, catering to different risk profiles:
- The Glacier Invest 2.5% Real Income Solution targets an investment return of 2.5% after taking inflation into account (therefore, a return of inflation + 2.5%). Investors in this solution are expected to draw an annual income of 2.5% of their investment value.
Similarly:
- The Glacier Invest 3.0% Real Income Solution targets an investment return of 3.0% after taking inflation into account;
- The Glacier Invest 4.0% Real Income Solution targets an investment return of 4.0% after taking inflation into account;
- The Glacier Invest 5.0% Real Income Solution targets an investment return of 5.0% after taking inflation into account;
- The Glacier Invest 6.0% Real Income Solution targets an investment return of 6.0% after taking inflation into account.
