This started last year as an exercise for one person who wanted to see all growth options in one place. It can be hard to decide which annuity to use when so many people will tell you that one product is better than the others. Not a whole lot has changed but a few things have so I decided to make this an annual deal where I show performance figures for indices used in some of the more popular contracts.
It was a rough year for markets and whether the S&P 500 is at an all-time high makes no difference to most portfolios. People who participated in broad-based market indices were more consistent than those who invested in individual stocks. Federal bailouts funneled money to large companies that were exempt from shutdowns and many small cap companies underperformed dramatically. So the overall stock market may look good but it didn’t necessarily spell success for everyone.
Just like individual stocks and mutual funds, index annuities this year produced performance that was all over the map. For my clients I feel fortunate to have had most in risk controlled indices that turned out nice returns for all except a few people who reset contracts at the bottom of the market in March.
The main point: safety good yield is possible if you know where to look. Without further ado, here’s a little light reading for your Sunday morning. Last year’s article is linked at the bottom if you’d like to go back and compare this to 2019.
Let me first offer two disclaimers:
- Each of these index returns will be limited by a cap, participation rate or spread and in some cases a combination of two out of three. Since those are changing constantly I’m not going to go into details of the actual contract yield. Let’s just see how each index performs.
- Most index annuities offer annual resets, meaning that’s how often you lock in gains. Some of the below options exist on a two or three year reset so there’s an extended period of time to either achieve more growth or have it wiped out by a downturn in the market.
Below you will see first the company, then the contract surrender term options and then the available index with annual performance from the past 12 months.
Midland National – 8 and 10 year surrender options
S&P MARC 5% Excess Return Index 8.67% annual yield
Fidelity Multifactor Yield 5% Index 4.69% annual yield
Great American – 5 and 7 year surrender options
S&P 500 Low Volatility Daily Risk Control 10% Index 5.09% annual yield
SPDR Gold Index 23.74% annual yield
Nationwide – 5, 7, 9 and 12 year surrender options
JP Morgan Mozaic II Index 1.12% annual yield
Allianz – 7 and 10 year surrender options
Bloomberg US Dynamic Balanced Index II 6.44% annual yield
PIMCO Tactical Balanced Index 5.29% annual yield
Blackrock iBLD Claria Index 5.32% annual yield
Lincoln National – 5, 7 and 10 year surrender options
Fidelity AIM Dividend Index 1.83% annual yield
Athene Annuity – 7 and 10 year surrender options
- Old Indices: Phased out for new contracts issued in 2020
- BNP Paribas Multi-Asset Diversified Index 3.79% annual yield
- Morningstar Dividend Yield Focus Target Index -5.06% annual yield
- Janus SG Market Consensus Index II -4.81% annual yield
- New Indices: Have only been available on new contract issued after February 2020 (both include partially back-tested performance data)
- AI Powered US Equity Index 4.47% annual yield
- NASDAQ FC Index 23.59% annual yield
Fidelity and Guaranty – 7 and 10 year surrender options
Barclays Trailblazer Sector 5 Index -0.13% annual yield
Balanced Asset 10 Index 9.63% annual yield
The above indices represent some of the more popular options that are most aggressively pushed by other agents and marketing organizations. The annuities themselves will not have much difference but the performance potential will be tied to the index options you have. Going back to my disclaimers, each of these will be limited by cap, participation, spread or even a reset that goes longer than one year.
For me it’s interesting to see how some of the highly touted index options of the past have actually performed in the real world. Lincoln and Fidelity & Guaranty came out with big claims of a hot new index and each of those fell flat. Athene completely revamped index options for new contracts because of poor performance and it looks like they have at least one new good option, but the new ones haven’t even been around for a full year so it will be interesting to see how actual performance looks going forward. If there are any other indices you’ve heard about but don’t see on this list, just drop me a note. I’ll dig into it and offer an honest opinion.
Check out last year’s article here: 2019 Annuity Index Performance Comparison