Download this Paper Open PDF in Browser

Using Trend-Following Managed Futures to Increase Expected Withdrawal Rates

23 Pages Posted: 7 Oct 2017  

Andrew K. Miller

Miller Financial Management, LLC

Date Written: October 5, 2017

Abstract

Decreased bond yields substantially increase the probability of portfolio depletion for investors using an initial 4% withdrawal rate. One way to increase the safe withdrawal rate of a portfolio is alter the composition of the portfolio without changing the portfolio’s overall risk level. I propose a portfolio construction solution that incorporates trend-following managed futures into portfolios. The resulting portfolio, consisting of 50% stocks, 40% bonds and 10% trend-following managed futures, allows an investor to increase “safe” initial withdrawal rates while still maintaining a similar risk profile to a traditional 50% stock and 50% bond portfolio.

Keywords: retirement, systematic withdrawals, 4% rule, safe withdrawal rates

JEL Classification: C15, D14, G10, G11, G17

Suggested Citation

Miller, Andrew K., Using Trend-Following Managed Futures to Increase Expected Withdrawal Rates (October 5, 2017). Available at SSRN: https://ssrn.com/abstract=3048332

Andrew K. Miller (Contact Author)

Miller Financial Management, LLC ( email )

PO Box 1702
Muncie, IN 47308
United States

Paper statistics

Downloads
212
Rank
123,059
Abstract Views
1,028