A recent study released by the Wharton School of the University of Pennsylvania indicates that fixed indexed annuity returns are not only much more consistent than S&P 500 index returns, but are quite attractive as well.
The study examines five-year annualized returns from 1997 to 2009, calculating industry average annuity returns based on actual returns credited by insurance carriers that offer fixed indexed annuities.
S&P 500 index returns, including dividends, are regarded as the premier measure of U.S. stock market performance. All periods studied ran from September 30 of the beginning year to September 30 of the fifth year, except for the 1997-2002 period which used a January 2 date.
The industry average annuity return exceeded 4% in all eight of the five-year periods examined. In contrast, only three of the annualized S&P 500 returns exceeded 4%, while in four of the periods, the S&P 500 index had a negative return.
Perhaps not surprisingly, the study noted that sales of fixed indexed annuities have climbed steadily since their introduction in the mid-1990’s. Recent sales levels have consistently exceeded $25 billion per year annually.
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