A list of words that are forbidden for use in life and annuity advertisements.
By Cyril Tuohy
John Hancock Investments has announced the launch of two new mutual funds which the company said target “lower-volatility equity strategies” to provide investors with a return that is acceptable given the amount of risk.
The John Hancock Seaport Fund “employs a long/short multi-sleeve equity strategy similar to a hedge fund-of-funds,” the company said in a news release. The John Hancock Enduring Equity Fund invests in worldwide companies with “long-lived physical assets,” relatively low levels of earnings volatility and that provide dividends, the company added.
“We see a clear need among investors and financial advisors for strategies that have the ability to participate in the market’s upward trend but with less volatility along the way,” said Andrew G. Arnott, president and chief executive officer of John Hancock Investments.
Low interest rates are making it very difficult for retirement investors on a fixed income to stay ahead of inflation or an unforeseen medical expense. Increasing the investment risks available to advisors is a way to keep those portfolios generating enough income to stay ahead.
Equity markets, meanwhile, boomed in 2013. The Standard & Poor’s 500 index rose by as much as 30 percent and the MSCI World Index rose more than 27 percent last year.
The long/short approach of the Seaport Fund means managers are prepared to borrow a stock to sell it at one price and buy it back later at a lower price. Such hedging strategies are considered riskier than straightforward buy-and-hold strategies.
John Hancock said investors and advisors investing in the Seaport Fund will have access to managers to whom only institutional investors would have had access in the past.
Investors in the Enduring Equity Fund will have more exposure to stocks in the global utilities, energy, infrastructure and transportation sectors where heavy government regulation and long-term contracts provide the basis for a steady, more conservative investment approach, the company also said.
Advisors use different funds and insurance products to meet the income needs of their individual clients. Annuities provide a safer investment than equity mutual funds because annuities pay a steady stream of income.
In the past two years, more annuity companies have tiptoed into alternative investments, proving that they, too, are willing to offer advisors more choices, some riskier than others.
Earlier this month, Guardian introduced its Guardian Investor ProFreedom Variable Annuity, for example. The company said this is the first time it has offered a deferred variable annuity with alternative investment options.
Alternative investments might include precious metals or commodities, or investing in one particular economic sector such as health care.
“With increasingly high correlations among asset classes, investors are looking for more effective diversification strategies,” said Douglas Dubitsky, vice president of product management and development for Retirement Solutions at Guardian.
ProFreedom allows investors to lock in market gains, and apply those gains to the income amounts deferred until a future date.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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