Osei K. Wiafe
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The role of commodities investments in the decumulation phase of retirement
John Hua Fan , Osei K. Wiafe doi: http://dx.doi.org/10.21511/imfi.13(3-2).2016.04Investment Management and Financial Innovations Volume 13, 2016 Issue #3 (cont. 2) pp. 322-327
Views: 998 Downloads: 178 TO CITEThis paper examines the role of commodity-related investments in the decumulation phase of retirement. Benchmarked against a balanced portfolio, the findings suggest that including commodities in a traditional portfolio improves the retirement outcomes at the lowest percentiles of wealth distribution. Furthermore, we demonstrate that downside protection is more pronounced by reducing allocation to equities (rather than bonds) to invest in alternatives. An equally weighted combination of passive and active commodity-related investments provides superior downside protection compared to a traditional portfolio at all levels of allocations used in the analysis. As a consequence, commodities may be employed as a portfolio diversification tool particularly in the decumulation phase of retirement.
Keywords: alternatives, commodities, life cycle, superannuation, retirement.
JEL Classification: G11, G23
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