Managed-Payout Funds Help Boomers Deal With Retirement –

 Our Comment by J. David Lewis – I found this article very interesting and timely.  As the excerpt below highlights, much of traditional investment discussion has focused on accumulating assets and selecting an array of instruments.  Now, at least some mutual funds are developing their marketing around the idea that they are particularly well suited to reliable streams of cash flow for the investors’ lifestyle spending.  For us the really interesting issue here is that we have been using and discussing prudent withdrawal rates from investment portfolios since the mid 1990s.  Our methodology has characteristics that are very similar to those attributed to this “new bread” of mutual funds.  While the concepts make a great deal of sense to us, we believe it is not as simple as buying a mutual fund to solve the withdrawal rate problem for any client.

 By Robert D. Hershey Jr., Published: October 9, 2010

“Although consumers have been slow to embrace managed-payout funds, the group’s rationale, at least, seems solid. The funds are aimed at investors at the stage of life when the top priority is a flow of income available for spending rather than the accumulation of assets.

Payout funds offer various approaches. Some are set up to provide a specified monthly payout, while others pay variable amounts based on what the portfolio produces. Some plan to deplete principal by a certain year; others can leave assets for heirs. Unlike annuities, payout funds have no guarantees. And they differ from target-date funds in that they are intended to get an investor “through” retirement, not “to” it.

“It’s a very attractive idea,” said Dan Culloton, Morningstar associate director of fund analysis, albeit with the caveat that its execution “is still a work in progress.”

Read the rationale via Managed-Payout Funds Help Boomers Deal With Retirement –

Contact J. David Lewis directly with or share your thoughts on this topic below. He founded Resource Advisory Services in 1985.  National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986.  He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 


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