Nationwide has announced the addition of two growth-oriented subaccounts and one fixed-income subaccount to its marketFLEX variable annuity (VA) to broaden the choices advisors can offer their clients.
The NVIT Flexible Strategy Funds, a suite of actively managed funds, are designed to streamline the investment process for advisors and offer clients wealth accumulation potential in a VA, the company said.
Eric Henderson, senior vice president of life insurance and annuities for Nationwide, said that recent volatility in the marketplace had caused advanced investors to “waver in their commitment to long-term strategies.”
Henderson said in a news release that the new funds will allow advisors to “address those concerns and offer market-responsive strategies.”
The three new subaccounts include Lazard NVIT Flexible Opportunistic Strategies Fund, which invests in “nontraditional assets” for long-term growth; NVIT Flexible Moderate Growth Fund, a fund that invests in stocks, bonds and other assets classes, and NVIT Flexible Fixed Income Fund, which provides income but allows managers and advisors to adjust allocations.
Nationwide, which notched $5.74 billion in new VA sales last year and gained 1.57 percent market share from 2012, also said the new investments are available immediately to current and new marketFLEX VA policyholders.
VAs, which are regulated as investment not insurance products, are generally bought by retirees and preretirees to generate more income as baby boomers live longer and their retirement years stretch further into the future.
With interest rates so low, however, it has been difficult for financial advisors to generate higher returns — without taking on undue risk. Giving advisors more choices with regard to the funds available to invest in through the annuity is a way to increase returns.
Investors seem open to exploring new options or generate more income out of their portfolios.
A survey of 702 investors conducted by Natixis Global Asset Management between May and June 2012 found that 69 percent of investors say they’re open to exploring new approaches for reducing volatility and managing risk.
VA industry sales are coming off a disappointing year. New VA sales dipped to $141.2 billion at the end of 2013, down 1.5 percent from 2012, according to Morningstar data, as VA carriers moved to limit many of the benefits.
Statistics issued by LIMRA peg total VA sales at $145.3 billion in 2013, down 1 percent from 2012. Fixed annuity sales hit $230.1 billion last year, up 5 percent from 2012.
The marketFLEX family of VAs is one of several families of VAs offered by Nationwide. VAs offered by Nationwide are deferred annuities.
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].