Ibbotson breaks down why FIAs should be in your clients’ portfolios

Roger Ibbotson, a well-known name and in the economic forefront, recently introduced a new white paper “Fixed Indexed Annuities: Consider the Alternative.” His white paper shows his research on why advisors should consider fixed indexed annuities in today’s low interest rate environment. This white paper is one of the first to be published giving a comprehensive and comparative analysis of FIAs and their value in clients’ asset allocation strategies. Ibbotson reviews the performance of pure portfolios (all equities, bonds and FIAs) as well as compares the traditional 60/40 strategy with equities and bonds verses equities and FIAs. 

“FIAs have many attractive features as both an accumulation investment and as a potential source of income in retirement,” says Ibbotson. “In simulation, the FIA performed better net of assumed fees than long term government bonds. We showed the FIA had comparable volatility to bonds but with better downside protection. In our study, when bonds under-performed, the FIA performed quite well.”

Ibbotson is Professor in the Practice Emeritus of Finance at Yale School of Management. He is also chairman and CIO of Zebra Capital Management, LLC, an equity investment and hedge fund manager. He is founder, advisor and former chairman of Ibbotson Associates, now a Morningstar Company. He has written numerous books and articles including Stocks Bonds Bills and Inflation with Rex Sinquefield (updated annually) which serves as a standard reference for information and capital market returns.
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Download your copy of the "Fixed Indexed Annuities: Consider the Alternative" white paper here.