Defeating the sequence risk devil

Mention sequence risk in any university finance department and you will probably be met with blank stares, writes Andrew Clare, professor of asset management at Cass Business School.

However, wealth managers know all too well how important this risk is. It refers to the order in which returns occur over time. The existence of sequence risk also means that accident of birth can have a big impact on an investor's experience. Multi-asset in retirement planning - Trevor Greetham Consider chart 1 (see below). Mr Unlucky retires in December 1999, with a pension pot of £500,000 and starts to draw a regular pension of £25,000 from a typical UK equity and bond investment portfolio, represented here by the IA Sector Mixed Investment 40-85% average. By 2017, the pot has s...