Guardian Capital Unveils Modern Tontine

While the new funds are only open to Canadian investors, researchers suggested in a recent paper that modern tontines could compete with annuities in the U.S. Tontine arrangements remain common in France.

Here’s how Guardian Capital describes its new GuardPath Longevity Solutions:

GuardPath Managed Decumulation 2042 Fund: This solution is specifically designed to optimize the utility of invested capital during retirement. It seeks to deliver attractive and steady cash flow over 20 years through sophisticated risk management techniques aimed at extending portfolio longevity.

GuardPath Modern Tontine 2042 Trust: The first investment solution of its kind in Canada seeking to deliver financial security to retirees in their later years of life through significant payouts to surviving unitholders in 20 years, based on compound growth and the pooling of survivorship credits.

Hybrid Tontine Series: Combines the strengths of the GuardPath Managed Decumulation and the GuardPath Modern Tontine to offer a holistic solution for an entire retirement. This first-of-its-kind solution is specifically designed to:

Optimize the utility of invested capital during retirement through steady cash flow for 20 years.
Provide significant payouts to surviving unitholders in 20 years.

“With our modern tontine, investors concerned about outliving their nest egg pool their assets and are entitled to their share of the pool as it winds up 20 years from now,” said Barry Gordon, managing director, head of Canadian Retail Asset Management, Guardian Capital.

“Over that 20-year period, we seek to grow the invested capital as much as possible to maximize the longevity payout. Along the way, investors that redeem early or pass away leave a portion of their assets in the pool to the benefit of surviving unitholders, boosting the rate of return,” he added.

“All surviving unitholders in 20 years will participate in any growth in the tontine’s assets, generated from compound growth and the pooling of survivorship credits. This payout can be used to fund their later years of life as they see fit, and aims to ensure that investors don’t outlive their investment portfolio,” Gordon said.

The number of people in Canada aged 85 and older has doubled since 2001, and projections suggest the number could triple by 2046, according to Guardian Capital.