AIG Life & Retirement launches multi-style index with AQR

AIG Life & Retirement, a division of American International Group, has launched the AQR DynamiQ Allocation Index, which is available exclusively through the Power Protector Series of Index Annuities. 

This multi-style index has been designed by AQR Indices, a subsidiary of AQR Capital Management, a global systematic investment management firm.

The AQR DynamiQ Allocation Index is the first-ever index to be developed by AQR for use in an index annuity and seeks to enhance returns and reduce risk by dynamically allocating across equity and fixed income markets from around the world. The index uses AQR’s style-based (factor) methodology to identify assets that have the potential to perform well across a variety of market environments. The AQR DynamiQ Allocation Index is not available for direct investment, but its returns are used to help determine the interest earned in the index annuity. In addition, any assets allocated to the index annuity are protected against market downturns, so consumers never lose principal or any interest earned due to market volatility.
“We are excited that AIG Life & Retirement will be the first to bring AQR’s sophisticated, style-based investment approach to consumers through an index annuity,” says Bryan Pinsky, Senior Vice President of Individual Retirement Pricing and Product Development at AIG. “AQR has built customised portfolios for some of the world’s largest institutional investors. Now they have taken the best practices and lessons learned from managing those assets to develop an index designed to provide stable growth with strong risk management.”
AQR’s signature index methodology is based on its decades-long research into styles, or factors that drive an asset’s performance. The AQR DynamiQ Allocation Index is designed to boost performance potential while managing downside risk by combining five distinct styles: Value (cheap assets), Momentum (assets that show positive long-term performance), Carry (higher-yielding fixed income assets), Defensive (higher quality, lower risk equities) and Trend (assets that show positive short-term performance). These styles are dynamically allocated across asset classes and geographic regions on a monthly basis based on a systematic, rules-based process that seeks to take advantage of changing market conditions.
“AQR is proud to work with AIG Life & Retirement to extend our expertise in applying analytical research to solve challenging client problems,” says David Kabiller, co-Founder of AQR. “We are committed to investment innovation and excited to apply it to index annuities. By diversifying across multiple styles, asset classes and geographies, the AQR DynamiQ Allocation Index has the potential to produce more consistent returns with lower risk than many indices.”
The AQR DynamiQ Allocation Index is available exclusively in the Power Protector Series of Index Annuities, which is issued by American General Life Insurance Company and distributed primarily through independent marketing organisations. These annuities combine tax deferral, principal protection against down markets, growth potential through a diverse range of index interest accounts, and guaranteed lifetime income options to help consumers prepare for retirement. Guarantees are backed by the claim-paying ability of American General Life Insurance Company.