Comprehensive Retirement Income Products, page-30

@Just_a_guy

Having read your last post again, I can now see that the point you were making was slightly different, i.e. whether CGF could actually benefit from a prolonged melt-up in asset prices (i.e. from lower yields across the board).

I am not so sure about that one, all else being equal. The point is that, when both equities and bonds are going up, all funds (whether they are labelled as “growth”, “balanced”, “income” or whatever else) tend to do very well on a mark-to-market basis. And, when people get used to seeing mark-to-market growth of 10% pa or more, they are disinclined to switch into products with yields in the low single digits, in absence of legislation pushing in that direction.

In this regard, I do expect the new CIPR framework to help significantly, in terms of future superannuation allocation, but that is irrespective of the future direction of yields.

Arguably, one good thing about having low benchmark yields and low risk premiums is that it allows for cheap financing; on balance, though, I still see such a scenario as representing a risk for CGF.

That said, as I tried to articulate in my previous post, it is not a scenario that I personally see as being likely to persist in the medium/long term.

Hope this clarifies my previous post a bit.