Bonds
Generally, bonds are good at matching liabilities of delivering a long-term income stream and therefore have a low-risk outlook for income. This can be explained further by considering when we re-calculate the sustainable income after the initial 3-year period the long-term outlook of bonds is a positive growth at the evaluated lower quartile (25th). This growth offsets some of the downside due to the change in the evaluated market condition from median (50th) to lower quartile (25th) resulting in a low-income risk outcome i.e., small drop in sustainable income.
Cash
Cash is poor at matching liabilities of delivering a long-term income stream and therefore there is more at stake when you consider the income at risk. This can be explained further by considering when we re-calculate the sustainable income after the initial 3-year period the long-term outlook of Cash is a small positive growth at the evaluated lower quartile (25th). This small growth is not enough to offset the downside due to the change in the evaluated market condition from median (50th) to lower quartile (25th). The low volatility with cash return means the fund value at term 3 is more stable across the projected scenarios reducing the change in sustainable income. Overall resulting in a medium income risk outcome i.e., medium drop in sustainable income.
Equities
Equities in the short term are volatile, resulting in a wide spread of fund values after 3 years changing the sustainable income significantly in some scenarios. At the evaluated lower quartile, the return is expected to be positive but still volatile. These factors result in equity having a larger drop in sustainable income. Overall resulting in a high-income risk outcome i.e., potential high drop in sustainable income.