By Cyril Tuohy
MetLife has announced the launch of an “investment-focused” variable annuity (VA) giving investors and their advisors more flexibility to design their own investment portfolios.
The variable annuity, known as MetLife Investment Portfolio Architect, offers investors as many as 80 different traditional and alternative investment options, as well as 14 “Blueprint Models” designed by MetLife Advisers LLC and Wilshire Associates.
Elizabeth Forget, executive vice president of MetLife Retail Retirement & Wealth Solutions, said in a news release that the goal of Portfolio Architect is to offer “well-curated investment choices,” as well as access to alternative investments.
Low interest rates have not been kind to fixed-income investors, and advisors are looking for retirement investments to deliver higher yields for clients. One way to boost yield is to increase a portfolio’s exposure to alternative investments, which go beyond the investment staples of stocks, bonds and cash to include commodities, precious metals and currencies.
Investing in alternatives means taking on higher risk and many advisors are still not comfortable with that strategy, but when interest rates fall — they were rising as of this report — advisors need to adjust and diversify portfolios once again.
Portfolio Architect is MetLife’s second variable annuity launch this month.
On Nov. 17, MetLife and Fidelity Investments announced the launch of a new deferred variable annuity that protects investors against loss if the annuity is held for a minimum of 10 years.
The annuity market appears to be shifting slightly in favor of variable annuities after a period of torrid sales for fixed annuities earlier this year.
While overall annuity sales in the third quarter dropped 2 percent to $58.2 billion compared to the year-ago period, variable annuity sales dipped only 1 percent in the third quarter compared to the year-ago period.
Variable annuity sales were $35.5 billion, according to LIMRA Secure Retirement Institute (LIMRA SRI).
Fixed annuity sales, however, dropped 5 percent to $22.7 billion in the third quarter compared to the third quarter last year, LIMRA SRI said.
“The 50 basis-point drop in interest rates since the start of the year has dampened interest in fixed products pulling down third-quarter sales,” said Todd Giesing, senior analyst with LIMRA SRI.
Meanwhile, through Tuesday the Standard & Poor's 500 index was up 11.83 percent for the year.
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 [email protected].
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