Analysis of Fixed-Index Annuity Linked to Volatility-Controlled Index
Document Type
Article
Publication Date
5-2023
Abstract
This study analyzed a hypothetical fixed-index annuity (FIA) contract linked to a 5 percent volatility-controlled index (VCI) and compared its performance with a traditional FIA linked to the S&P 500 Index, the stock benchmark itself, and a corporate bond benchmark. The simulation results showed that the FIA linked to the 5 percent VCI outperformed the traditional FIA, the bond benchmark, and enjoyed a higher sharp ratio than the stock benchmark. Risk parity, VCI, and the other factors contributing to the outperformance were studied.
Recommended Citation
Zhixin Wu, & Lei Liang. (2023). Analysis of Fixed-Index Annuity Linked to Volatility-Controlled Index. Journal of Financial Service Professionals, 77(3), 57–72.