Allianz Life Insurance Company of North America, a leading provider of fixed index annuities (FIAs), today announced the launch of the PIMCO Tactical Balanced Index as an allocation option on Allianz 360SM Annuity and Allianz 222® Annuity.
This new index dynamically allocates daily between the S&P 500® Index, a bond component comprised of the PIMCO Synthetic Bond Index with a duration overlay, and cash. The PIMCO Tactical Balanced Index leverages the expertise of PIMCO to manage volatility.
One of several indexes available on select Allianz FIAs, the PIMCO Tactical Balanced Index is being offered exclusively to Allianz Life through 2020. The PIMCO Tactical Balanced Index allocation option is available with annual point-to-point crediting method with either a cap or a spread.
"Allianz Life offers unique index allocations within our FIAs and we are fortunate to partner with PIMCO giving customers another strategic option for their assets," said Allianz Life Vice President of Product Innovation Matt Gray.
"The PIMCO Tactical Balanced Index may help combat market volatility by dynamically allocating between the equity component, the bond component, and cash to stabilize index performance over time. Additionally, the duration adjustment is an innovative feature that could potentially help customers benefit from steadily rising interest rates."
The PIMCO Tactical Balanced Index provides potential benefits to customers by offering a balanced approach during periods of volatility, the ability to potentially benefit from interest rate trends, and attractive long-term return potential.
"We are very excited that Allianz Life chose the PIMCO Tactical Balanced Index as part of its fixed index annuity platform," said Josh Davis, Executive Vice President and portfolio manager for PIMCO.
"The PIMCO Tactical Balanced Index uses an innovative asset allocation framework that aims to provide a stable risk profile through constantly evolving equity and interest rate market environments."
Balance during volatility
During periods of market volatility, the PIMCO Tactical Balanced Index seeks a more stable risk profile by systematically adjusting its allocations between the equity component, the bond component, and cash, based on changes in market trends.
Generally, when equity market volatility is low, the balance will shift to the equity component; and when equity market volatility is high, the balance will shift to the bond component. If the volatility is high in both the equity and bond markets, the balance will shift a portion to cash.
Potential benefits from changing interest rates
To address potential interest rate risk, the bond component of the PIMCO Tactical Balanced Index uses a duration overlay to systematically adjust its interest rate exposure based on underlying trends in the bond markets. This provides a unique alternative to traditional bond exposure by being able to dynamically adjust interest rate risk and potentially benefit as interest rates rise.
Potential long-term returns
PIMCO Tactical Balanced Index seeks to deliver long-term return potential by providing a dynamic and flexible alternative to static multi-asset class indexes. It seeks to deliver a consistent risk profile and adjusts interest rate exposure as market conditions change. By doing this, the index seeks to reduce the risk of large drops in performance while maintaining upside potential, even during periods of rising interest rates.