There is little doubt that fixed indexed annuities (FIAs) provide a risk-return function that investors want – they limit losses and have the ability to shape potential returns. But since interest rates have decreased, indexed annuities linked to risk control indices have become increasingly popular.
Risk control indices use a dynamic asset allocation strategy based on the index and cash, where they preselect a volatility target. Whenever volatility of the index is above the target, the risk control index disinvests from the index and invests in cash instead. The reason for their success is linked to the very reason they exist: in bear markets, where volatility is high, the risk control index is not exposed to equity markets, so it outperforms the benchmark. In a sideways market, ho
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