When it comes to assessing performance of retirement income portfolios, the existing benchmarks and indices — whether we consider the S&P 500 or the broader Russell 3000 or even the MSCI family — all fall short.
It is time to create and promote an index that is geared towards systematic income plans as opposed to buy-and-hold accumulation plans. The index must account for both market performance and the maximum lifetime spending rate that can be obtained without incurring any longevity risk.
The QWeMA Sustainable Portfolio Withdrawal Index (or QSPW index) is that index. It identifies the inflation-adjusted income stream a portfolio would produce if completely annuitized. The QWeMA Group launched this innovative benchmark on January 1, 2010 and will report the index monthly.
The QSPW index allows a user to compare any portfolio to a portfolio which is being withdrawn according to a plan that is 100% sustainable.
For more information about the QSPW index, please click here to read the January 2010 Research Magazine article, “A Truly Relevant Benchmark.”
