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Bloomberg US Dynamic Balance Index II Overview

The Bloomberg US Dynamic Balance Index II reflects the performance of an index strategy that uses the S&P 500® Index and the Bloomberg Barclays US Aggregate RBI® Series 1 Index.

The S&P 500® Index is a well-established benchmark for U.S. equity markets. The Bloomberg Barclays US Aggregate RBI°Series 1 Index is designed to track the Bloomberg Barclays US Aggregate Bond Index —a well-established benchmark for the U.S. bond markets.

Every day, the Bloomberg US Dynamic Balance Index II (BXIIUDB2) dynamically allocates between the S&P 500® Index and the Bloomberg Barclays US Aggregate RBI® Series 1 Index based on their historical realized volatility (a measure of the magnitude of daily movements, regardless of direction, of an index).

In general, when the S&P 500® volatility is low, the balance shifts more toward the S&P 500®. 

And vice versa: When volatility is high, the balance shifts toward the Bloomberg Barclays US Aggregate RBI® Series 1 Index. The balancing of risk every day helps stabilize index performance over time.

Bloomberg US Dynamic Balance Index II Mechanics

Realized volatility is calculated for the S&P 500® Index and the Bloomberg Barclays US Aggregate RBI® Series 1 Index over 20 days and 40 days.

  • For the S&P 500® Index, the greater of the 20- or 40-day realized volatility is used to determine the weighting.
  • Realized volatility for the Bloomberg Barclays US Aggregate RBI® Series 1 Index is calculated based on historical daily returns over the corresponding period of 20 or 40 days.

These realized volatilities are used to determine the final weight allocation daily.¹

One nice feature of these types of cross-asset strategy indices is the fact there is no human component involved. In recent months many fund managers have ventured beyond a fund’s normal asset quality in search of yield due to our ultra-low interest rate environment. The allocation weights in the Bloomberg US Dynamic Index II are controlled purely by an algorithm from which it does not stray.

BXIIUDB2 Hypothetical Historical Weighting

Here is a hypothetical chart showing how the last 14 years of weighting between the two underlying indexes would have looked, had the Bloomberg US Dynamic Balance Index II existed (the index came into existence on April 14, 2015). As you can see, in periods like 2008 when volatility was high, the index would have shifted to be nearly all in the Bloomberg Barclays US Aggregate RBI® Series 1 Index.

Bloomberg US Dynamic Balance Index ll hypothetical historical index weights 2005 — 2019

Bllomberg us dynamic balance index ii historical hypothetical weighting chart 2005-2019

The 14-year period shown reflects the longest common period of historical data available for each of the indexes that comprise the Bloomberg US Dynamic Balance Index II.

Bloomberg US Dynamic Balance Index II Historical Performance

Let’s see how the Bloomberg US Dynamic Balance Index ll would have looked relative to its components (the S&P 500® Index and the Bloomberg Barclays US Aggregate RBI® Series 1 Index) over the last 14years. Again, in periods like 2008 when the S&P 500® Index dropped significantly, the weighting would have shifted to the bond index, which would have helped keep the Bloomberg US Dynamic Balance Index II from a significant drop, as well.

Chart of bloomberg dynamic balance index ii index returns 2005-2019 compared to s&p 500 returns

Showing the index comparison doesn’t necessarily indicate how much interest would have been credited to a fixed index annuity over that time period. Actual contract results would depend on the crediting method chosen, and caps and spreads in place during that time period. Past results are not a guarantee of future results.

About Hypothetical Historical Depictions

This index was launched on August 14, 2015. All information presented before this launch date is hypothetical (back-tested), and back-tested performance is not actual performance. 

The back-tested performance is based on the methodology and mechanics of the index retroactively applied to historical market data, as if the index had previously existed, to generate hypothetical performance during the periods of time depicted. This back-tested performance for any constituent that makes up the index may have actual performance and history, and it will also have back-tested data for any period before its inception. 

Back-tested performance may not be a reliable indicator of future results. Prospective application of the methodology and mechanics of the index may not result in performance commensurate with the back-tested returns shown.

How the Bloomberg Us Dynamic Balance Index Works in an Allianz Annuity

The Bloomberg US Dynamic Balance Index II allocation is available on the Allianz 222, Allianz 360, and Allianz Core Income 7 Annuity with an annual point-to-point crediting method that has either a cap or spread – it’s up to you. It resets annually, which provides you with the opportunity to receive interest every year the index rises.

The chart highlights the last 14 years of hypothetical historical returns in the Bloomberg US Dynamic Balance Index II, and the interest that Allianz would have credited after applying a cap or spread.

It assumes the Allianz annuity was issued on 1/1/2005 and was available during this time period, which it was not. The Bloomberg US Dynamic Balance Index II return reflects hypothetical historical data from 12/31/2004 to 12/31/2018 using current caps and spreads. 

Remember, this chart represents past hypothetical results only. Actual caps or spreads that could have been applied over this time frame would have been different from the figures in this example and some cases may have been dramatically higher or lower, depending on several factors. 

Actual results will vary depending on market conditions, index allocation choice, caps, and spreads. No single crediting method consistently delivers the most interest under all market conditions.

Barclays us dynamic balance index ii allianz annuity hypothetical returns chart

In an index scenario with flat or negative results, the LOWEST possible indexed interest rate is 0%. This is not intended to project or predict future results. 

¹Weighting allocation can change up to 3% daily.

Annuities are distributed by My Annuity Store, Inc. Guarantees are subject to the claims-paying ability of the insurer. My Annuity Store, Inc. does not advise clients on the purchase of non-fixed annuity products. The information presented here is not of tax or legal nature and is not intended to be a recommendation to purchase a fixed annuity, fixed index annuity, variable annuity contract, registered index-linked annuity (RILA), immediate annuity (SPIA), longevity annuity, or Qualified Longevity Annuity Contract (QLAC). 

The contract features described may not be current and may not apply in the state in which you reside. Annuities are issued by Insurance companies and contracts are ‘state-specific’. Insurance companies also change their products and information often and without notice. Annuities are subject to the terms and conditions of the specific contract issued by the insurer, are not FDIC or NCUA insured, are not bank guaranteed, may lose value, and are not a deposit. Please call (855) 583-1104 if you have any questions or concerns. 

The information presented here is not a representation regarding the suitability of any concept or product(s) for an individual and it does not provide tax, accounting, or legal advice. It is important to read the prospectus carefully and consider your objectives, risks, fees, and charges associated with the contract. You should always consult your own financial planning, tax, and legal counsel to determine if a fixed annuity, immediate annuity, longevity annuity, or Qualified Longevity Annuity Contract are suitable in your financial situation.

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Kiara Caudill

Kiara Caudill

I spent the first 10 years of my career as a clinical mental health therapist and I saw firsthand that finances play a large role in one’s happiness. A good financial plan is not only important to your financial health it’s also important to your mental health. I approach financial planning from a behavioral finance perspective using a goals-based approach. Kiara holds a B.A. Degree in Psychology from Goshen College and an M.A. in Clinical Mental Health Counseling from Valparaiso University.

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