Each month, the National Association for Fixed Annuities (NAFA) and The Index Standard track the performance of major indexes used in FIAs. These benchmarks help show the behavior of underlying markets connected to FIAs, including S&P 500 as well as risk-managed and multi-asset strategies.
It’s important to understand these results aren’t representative of actual FIA returns. Instead they reflect index performance before the insurer applies crediting rates, such as caps, spreads, and participation limits. While your actual credited rate will likely be lower, it will never be negative, since your principal is protected from market losses.
While the FIA index data helps you understand market potential, it doesn’t guarantee results. Your contract’s terms and crediting method will determine your credited interest.
September 2025 Performance Snapshot
Markets rebounded in the third quarter of 2025 following a mid-year slowdown and the Federal Reserve’s September rate cut. Equity-linked FIA indexes led the way, while several volatility-controlled and AI-based indexes lagged behind.
| INDEX TYPE | TOP PERFORMERS | YTD RETURN | HIGHLIGHTS |
|---|---|---|---|
| Equity-Linked | S&P 500 (+13.7%), Nasdaq-100 (+17.5%), Invesco QQQ 15 (+9.7%) | 9–17% | Strong equity recovery boosted uncapped and high-participation-rate products. |
| Risk-Controlled (10–12%) | S&P 500 ADRC 10% (+6.1%) | ~6% | Lower volatility meant smoother but smaller gains. |
| Multi-Asset / Balanced | Bloomberg Versa 10 (+16.2%), S&P MARC 5 (+8.2%) | 6–16% | Diversified blends gained from falling bond yields and strong U.S. stocks. |
| Underperformers | SG AI Navigator (–6.7%), Smart Passage SG (–4.1%) | Negative | AI-driven and global models struggled with uneven volatility and currency shifts. |
What It Means for FIA Owners
For consumers, this data translates into a few practical takeaways:
- Caps and Participation Rates Matter
Even if an index grows 10%, you might be credited with 4%–6% depending on your contract’s participation rate or cap.
Example: If your FIA tracks the S&P 500 ADRC 10% Index (+6.1%) with a 70% participation rate, your credited growth could be around 4.2%.
- Your Principal Is Always Protected
Several indexes posted small losses in September. Despite this, FIA holders didn’t experience any loss in value. This downside protection remains a defining advantage of FIAs. - Diversification Pays Off Over Time
Multi-asset and balanced indexes, like Bloomberg Versa 10, show how FIAs smooth performance over multiple market cycles — not just bull runs.
A 10% increase in your participation rate can raise your credited growth by roughly 0.5%–1% annually, without taking additional market risk.
Market Context: Why These Numbers Look the Way They Do
September’s results came amid major economic shifts:
- The Federal Reserve’s 0.25% rate cut improved bond prices, lifting total returns for balanced and volatility-controlled indexes.
- U.S. equities outperformed international markets, giving traditional indexes like the S&P 500 a clear advantage.
- Risk-managed and AI indexes lagged as volatility models adjusted slowly to choppy global trading conditions.
These patterns highlight the design trade-off of FIAs — moderate growth potential in exchange for protection and stability. Unlike direct equity investments, FIA returns are smoothed over time, offering reliable growth while protecting your savings from full market risk.
How to Interpret FIA Index Reports
Each FIA credits interest based on a set of rules that translate index performance into your account growth. Here’s a quick refresher:
| Term | Meaning | Example |
|---|---|---|
| Cap | The maximum percentage you can earn in a crediting period. | If the cap is 8% and the index rises 10%, you’ll earn 8%. |
| Spread | The amount subtracted before interest is credited. | With a 2% spread, a 6% index return yields 4%. |
| Participation Rate | The percentage of index gain you receive. | A 70% participation rate on a 10% index gain = 7% credit. |
When market volatility rises, insurers often adjust participation rates to maintain balance. Reports like NAFA’s give a helpful snapshot of how indexes are performing, but it’s your annuity’s crediting terms that tell the real story. Over time, FIAs are built for consistency, not short-term spikes.
Stephen Kates, CFP®Principal Financial Analyst for Annuity.orgStephen Kates, CFP® is a personal finance expert specializing in financial planning and education. He serves as the Principal Financial Analyst for Annuity.org, where he delves into industry trends to support consumers and financial advisors on wealth management, annuities, retirement planning, and investing.
What to Do Next
The September 2025 FIA report shows opportunity and caution in equal measure. Equity-linked indexes remain strong, while volatility-controlled options are holding steady.
If you’re considering a fixed index annuity or already own one, now is the perfect time to review your crediting rates and determine whether newer contracts offer better growth potential.
