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September 07, 2022 at 04:58 PM
What You Need to Know
- The tontine aims to provide significant payouts to surviving unitholders in 20 years.
- Moshe Milevsky, who helped develop the tontine, says it is structured like a mutual fund.
- The products are only open to Canadian investors, but researchers have suggested a similar offering could be feasible in the U.S.
Guardian Capital LP on Wednesday introduced a suite of products, including a modern tontine, aimed at solving what the firm calls a misalignment between human and portfolio longevity.
The products, designed for Canadian investors, were developed with financial industry consultant Moshe Milevsky, finance professor at York University in Toronto and author of a new open-access book, “How to Build a Modern Tontine: Algorithms, Scripts and Tips” (Springer-June 8).
They seek to ensure retirees have enough income to meet their current needs while not outliving their nest egg, according to Guardian Capital.
“I’m so proud to be part of these made-in-Canada solutions, which address the biggest risks facing retirees and are among the first of their kind globally,” Milevsky said in a statement.
“Based on hundreds of years of research and improvement and backed by Guardian Capital’s 60-year reputation for doing what’s right for Canadian investors, I am confident these solutions will revolutionize the retirement space,” he said.
In a traditional tontine, a group of people fund an annuity, with payouts to survivors growing as each participant dies. Milevsky recently told ThinkAdvisor that the modern version he helped create is structured as “a garden-variety mutual fund, which you can purchase but never exit.”
