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EquiTrust |E-Connect
The Importance of Index Strategy Diversification
There’s a good reason why index annuities offer a variety of index strategies — not all perform consistently through varying market cycles.
For example, a point-to-point cap strategy tends to perform well in a stable growth environment, while an averaging strategy tends to stand out more in a volatile environment.
The “quilt” chart below shows the annual performance rankings among the (1-year) index accounts offered with MarketValue Index Annuity during the 3 years ending 12/31/2018.
MarketValue Index
Index strategy annual performance rankings 1/1/2016 – 12/31/2018; Assumes cap and participation rates in effect 4/1/2019
By diversifying premium among a variety of strategies, your clients may realize more consistent overall performance than going “all in” on a single strategy — and reduces the temptation to chase past results by reallocating.
Important Considerations When Evaluating an Index Annuity When seeking an accumulation-focused index annuity, consider the cap and participation rates available among all strategies offered. Index strategy performance is subject to market conditions throughout the year, not just the index change at the end of the contract year. Also consider the issuer’s commitment to strong renewal rates.
Index Annuity for All Seasons MarketValue Index features a 10-year design, and 8 index-linked strategies with competitive cap and participation rates. Two account options are linked to a multi-asset, risk-controlled “Dynamo Index.”
