Income drawdown portfolios could see growth if annual withdrawals are kept within sustainable levels, according to Royal London.
Analysis on the performance of the Royal London Governed Retirement Income Portfolios (Grips) revealed that despite taking an income of between 4 per cent and 6 per cent per year, a £50,000 investment made seven years ago would have accrued more today than originally invested.
Royal London’s figures showed that a £50,000 investment in Grip 3 with an income of 4 per cent a year over seven years would currently stand at £63,417.
Meanwhile, someone who invested in Grip 5, again taking a 4 per cent annual income, would currently have more than £73,000 in their portfolio.
This compared with a benchmark return of £56,288.
Lorna Blyth, head of investment solutions at Royal London, said: “An income drawdown portfolio can enjoy strong investment growth, but if the levels of withdrawals are too high then customers risk running short of money.
“These figures show that by working with an adviser to keep withdrawal rates at a sustainable level, customers can benefit from a resilient income drawdown pot that can weather the storms caused by issues such as trade wars and Brexit.”
The Grip portfolios, launched in August 2012, range from one to five, depending on the client’s attitude to risk with Grip 1 being the lowest risk.
Assets under management of the Grip portfolios currently stands at £3.7bn, according to Royal London.