You may add a fixed indexed annuity (FIA) to your portfolios or models. The following parameters are supported:
- Tracking index
- Cap rate (%)
- Participation rate (%)
- Calculation method:
- Point-to-point monthly
- Point-to-point annual
- Point-to-point 2 years
To add a FIA to a portfolio, follow these steps (selecting 'Fixed Indexed Annuity' in the dropdown menu)
Please note the following assumptions when modeling the FIA in the portfolio:
- The anniversary date is 12/31. Consequently, the annuity value is updated only on 12/31. For any other date, the year-to-date gains will be zero. We recommend looking at historical performances in annual periods (1y, 3y, 5y etc.)
- The annuity is not included in the advisory fees calculations for the portfolio by default. For example, if a $100,000 portfolio contains 20% annuity, and an advisory fee of 1% is specified, the fee for the hypothetical illustration is $800 ( = $100,000 * 1% * 80%). If you would like to have annuities included in the advisory fee calculations, please submit your request to firstname.lastname@example.org.
Common tracking indexes are available from the dropdown menu. If the required index is not listed, please email email@example.com.
If we are not able to provide the index, we recommend uploading the annuity performance from the annuity fact sheet.
Understanding Risk metrics with FIA’s:
Kwanti main risk metric is volatility, calculated as the standard deviation of monthly returns. But annuities and structured notes don't have monthly returns. From a mathematical point of view, this translates into a high standard deviation because of the big jumps in return every December (or whatever the anniversary date is for the product).
We realize that this is a problem for portfolio risk assessment and client communication. We are working to find a solution to this. In the meantime, other risk metrics (such as maximum drawdown or stress test) do not exhibit this problem and should be favored.