Your Mid Year Check Up

Your Mid Year Check Up

We’re nearly halfway through 2018 – and the market continues to experience volatility as it digests the outcomes of last year’s tax cuts, the comeback of inflation, geo-political policy uncertainties, and the likelihood of the Fed to increase rates in 2019.

A key reason to consider an index annuity in a client’s retirement portfolio is to further diversify traditional fixed income assets.  As interest rates rise, bond prices will experience downward pressure.  An index annuity as a component in a fixed income portfolio can be used as an uncorrelated asset which participates in the upside volatility of the markets with protection from any downside losses.

In our experience, clients who have an index annuity positioned as a fixed income asset have been pleased with outcomes when compared to the performance to other fixed income peers.

The Barclays US Aggregate Bond Index, which is a broad base bond index used to represent investment grade US bonds, has returned -1.02% for the year.

When looking at the same timeframe, the trailing 1-year period, we have several indexes that standout:

  • The PIMCO index at AIG has returned 13.42% – with an annualized spread of 2.65%, a client would be on track to earn over 10%
  • The S&P 500 Risk Control Index at Great American has returned 13.24% – with a 70% participation rate, a client would have locked in a 9.27% return
  • The Janus index at Athene has returned 14.12% – with a 100% participation rate, a client would be on pace for a 14.12% return

Expecting these double digit returns every year is unrealistic.  However, it’s important to understand the earning opportunity that an index annuity can have as a growth vehicle over the long term. Your clients’ results will be based on several factors, including index performance and rates.


Index Insurance Co. YTD 1 Year
Barclays US Aggregate Bond Index Index Benchmark -2.07% -1.02%
Merrill Lynch Strategic Balanced Index AIG -1.46% 0.51%
Bloomberg US Dynamic Balance II Index Allianz 2.05% 9.28%
S&P US Retiree Spending Index Great American 1.07% 5.03%
S&P 500 Daily Risk Control 5% Index Lincoln 3.08% 11.44%
S&P 500 Average Daily Risk Control 10% USD Price Return Index Great American 3.09% 13.24%
BNP Paribas Multi Asset Diversified 5 Index Athene -0.86% 1.97%
Goldman Sachs Momentum Builder Multi Asset 5 Index Integrity 0.58% 7.05%
Morningstar Dividend Yield Focus Target Vol 5 TR Athene -0.70% 5.07%
Citi Flexible Allocation 6 Excess Return Index Protective -1.74% 4.72%
Janus SG Market Consensus Index Athene -3.98% 14.12%
PIMCO Global Optima Index AIG 1.74% 13.42%
S&P 500 Daily RC2 8% Athene 2.92% 14.07%

Share this post