Nationwide, Annexus and Capital Group recently launched what they call “the first fixed indexed annuity (FIA) in the industry to include a strategy linked to an actively managed mutual fund.”
This new strategy is linked to the American Funds Growth Fund of America Class F-3 mutual fund within the Nationwide New Heights Select suite, according to the announcement.
FIAs are meant to provide predictable returns and principal protection. As Annuity.org explains, “your principal is protected from market losses. If the index linked to your annuity declines, your account value does not go down due to market performance.”
And as Nationwide puts it, FIAs are tax-deferred, long-term savings contracts issued by an insurance company.
In addition, Nationwide said it added two more indexes to its New Heights Select suite.
These include the S&P 500 Distance Stabilizer Index3 and the GS American Funds GFA 15% Index.
How Is This Fund Different?
Stacy LaiFook, vice president of Nationwide annuity business development, told Annuity.org that one of the biggest value propositions of a mutual fund-linked strategy is that it gives financial professionals direct, transparent access to investment structures that have served their clients for decades.
“This ability to refer an individual back to an actual mutual fund’s track record, across different economic environments, and then be able to articulate, with confidence, how a client’s contract would have performed is paramount to building trust within the retirement lifecycle,” she added.
Keith Golembiewski, assistant vice president and head of LIMRA Annuity Research, also noted that typically, FIA performance is based on an index and the changes in performance.
In this product, however, performance would be based on the performance of an active mutual fund, up to a cap or limited by participation, he added.
On the timing of this launch, LaiFook said the industry still relies heavily on pure S&P 500 exposure in indexed products.
“As a result, Nationwide is focused on bringing solutions to market that offer an alternative approach to capturing equity upside,” she said. “We’re doing this within our New Heights Select offerings, while also providing access to investment strategies that both financial professionals and clients can clearly understand.”
Who Is This Best Suited For?
According to LaiFook, the fund, as well as the new S&P 500 Distance Stabilizer and the GS American Funds GFA 15% indices, are suitable for “even the most risk-averse clients.”
“Some clients are more comfortable with return fluctuations inherent in pure solutions like S&P 500 and Growth Fund of America, while others are looking for more stability. These two new indices provide an opportunity to participate in the growth potential of S&P 500 and Growth Fund of America with more return stability,” she said.
The S&P 500 Distance Stabilizer Index, developed with Société Générale, tweaks its exposure to the S&P 500 without relying on fixed volatility targets, bonds or commodities, according to the announcement.
It “measures volatility over multiple recent time windows, which allows for flexibility to navigate short-term fluctuations and increase exposure during subsequent market rebounds,” according to an S&P fact sheet.
Meanwhile, the GS American Funds GFA 15% index has an intraday trading strategy, “designed to respond more quickly to changes in market volatility,” according to the announcement.
As for LIMRA’s Golembiewski, he said the new product suits someone seeking protected growth and guaranteed lifetime income.
“Need for guaranteed lifetime income. Full downside protection,” he said, adding it’s not suited for someone who wants predictable growth or has zero tolerance for risk.
Long-Term Capital Appreciation
The companies said the fund seeks opportunities in traditional growth stocks, as well as cyclical companies and turnaround situations with significant potential for capital growth.
Golembiewski explained that traditional growth stocks are companies expected to achieve above average earnings and revenue growth. In contrast, cyclical companies are businesses whose performance tends to improve during favorable economic conditions.
The fund also looks for turnaround opportunities, which are companies undergoing significant operational, financial, or strategic improvements that could lead to substantial increases in their market value, he added.
According to him, by combining these investment approaches, the fund aims to identify stocks with significant potential to increase in value over time, while maintaining the flexibility to capitalize on opportunities across different market environments and stages of a company’s development.
Will We See Similar Products Emerge Soon?
Tom Buckingham, chief growth officer at Nassau Financial Group, said that going forward, carriers will likely continue looking beyond traditional annuity strategies as they develop new products.
“With people living longer and fewer retirees able to rely on traditional pensions, finding ways to balance growth potential and protection will continue to be important,” Buckingham said, adding that bringing ideas from the asset management industry into annuities is one way we may see that innovation continue.
“Innovation is important, but the key question is whether it will deliver better consumer value,” he added.
Golembiewski echoed the sentiment, saying that while he expects similar funds to emerge, there are difficulties such as hedging costs, options pricing, and risk management based on an active investment that could change underlying investments.
“I wouldn’t be surprised if we see some more examples by other annuity carriers focused on other mutual fund asset managers,” he said.
Finally, Nationwide’s LaiFook said investors are gravitating toward mutual-fund-linked options based on what she has seen since the company’s registered-index-linked annuity (RILA) strategy launched in 2025.
“We continue to see opportunities to bring more mutual fund-linked strategies to market as a result of this strong interest, potentially even expanding into asset classes that have not historically been captured within indexed products,” she added.
