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Assets in Ibbotson ETF portfolios grow 54 per cent in six months


Denver-based Alps Advisors says assets in its Ibbotson ETF Allocation Series have increased more than 54 per cent during the previous two quarters.

Denver-based Alps Advisors says assets in its Ibbotson ETF Allocation Series have increased more than 54 per cent during the previous two quarters.

The increase in assets, driven by strong inflows during the market decline, is a significant deviation from sagging sales elsewhere in the variable annuity and mutual fund industry.

Launched in April 2007 primarily for use in variable annuities and variable life contracts, the Ibbotson ETF Allocation Series consists of five asset allocation portfolios that invest exclusively in exchange-traded funds.

Ibbotson Associates, an asset allocation authority, is sub-advising the portfolios with Alps serving as adviser.

‘The growing client demand for exchange-traded and index-based products is very encouraging in light of where the markets have been,’ says Corey Dillon, vice president and director of Alps Institutional Advisory Services.

‘As many insurance companies are now scrambling to offer index-based investment options, our partners who made these portfolios available to their policyholders in the last couple years are now finding themselves well positioned to compete.’

Hal Harris, national sales vice president at Securian Retirement Distributors, adds: ‘Incorporating the Ibbotson ETF Allocation Series from Alps within our variable annuities has proven to be a differentiator to our reps and their clients. This has helped drive sales, especially through the independent broker dealer channel, as we have attracted more reps who are looking for a robust range of investment options within a variable annuity structure.’

With insurers facing rising costs to hedge the guarantees in their annuity and life insurance business, Alps expects to see even greater demand for both asset allocation and ETF-based investments.

‘We are just beginning to scratch the surface of ETF solutions in the insurance market as providers look for ways to reign in basis risk and control their costs of hedging,’ Dillon says.

Assets in the Ibbotson ETF Allocation Series totalled USD71.5m as of 31 March, up from USD46.3m at 30 September 2008.

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