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Portfolio Integration Live.

Say a client’s standard portfolio is exposed to nine different asset classes: 1) the broad bond market (represented by the AGG ETF); 2) intermediate bonds (BIV); 3) convertible bonds (ICVT); 4) high yield bonds (JNK); 5) S&P 500 (VOO); 6) value stocks (VTV); 7) growth stocks (VUG); 8) non-US stocks (EFA) and 9) hedge funds (represented by the Eureka hedge fund index).

Next, a client’s investment objective – conservative; balanced; aggressive – dictates the optimization across these asset classes.

Since there isn’t an FIA or RILA industry benchmark, an Allianz Life Insurance Company of North America FIA (Core Income 7; S&P with cap; 1-year point-to-point; 7-year surrender) and RILA (Index Advantage; S&P 500; 1-year point-to-point; 10% buffer; 6-year surrender) are used as proxies.

Integrating an FIA or a RILA adds important risk-adjusted return benefits, chiefly by protecting against losses. Important for asset allocation, an FIA mostly mirrors traditional fixed income metrics but without downside exposure. A RILA, with less downside protection but a higher upside to the target index, fits tightly to a balanced mandate.

And, don’t forget, when FIA/RILA returns are shown, the actual result is even better when the pre-tax equivalent adjustment is made (i.e., return/(1-combined federal and state tax rate)).


To avoid accusations of handpicking to show only the best results, the FIAs and RILAs used in the analysis were selected simply because Allianz was the first insurance company listed in alphabetical order, and their products’ features were most common.  Superior selections will result when using Select{e}Annuity’s powerful FIA/RILA selection engine.)

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Base Portfolio

(Comprised of 9 representative asset classes)

With an FIA

(The 9 base portfolio asset classes plus 1 standard FIA)

With a RILA

(The 9 base portfolio asset classes plus 1 standard RILA)

With Both

(The 9 base portfolio asset classes plus the FIA and RILA)

All Together

(The 9 base portfolio asset classes plus the FIA and RILA)