Sequence of Returns Risk for Islamic Investors

Abstract

For Islamic investors, sequencing risk is an omnipresent factor for retirement outcomes. This study shows that simple diversification can provide benefits to reducing the impact of sequencing risk. However, the results from the accumulation and distribution phases suggest that retirement products need to consider approaches that go beyond the received set-and-forget approach. The findings point rather to a more dynamic, whole-of-life approach to be adopted by Islamic retirement products.