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AIG and PIMCO launch new global index

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American International Group has launched the new PIMCO Global Optima Index, developed exclusively by Pacific Investment Management Company LLC (PIMCO) for AIG’s Power Series of Index Annuities.

These fixed index annuities are issued by American General Life Insurance Company (AGL) and The Variable Annuity Life Insurance Company (VALIC), both member insurance companies of AIG.
 
The PIMCO Global Optima Index provides the opportunity for more growth potential than indices that focus solely on the US or a single sector. It seeks to outperform by using quantitative rules to adjust its allocations across a diverse range of US equity, international equity and US fixed income markets.
 
“We are really excited to partner with PIMCO to bring consumers a new index that combines the expertise of a global leader in asset management with the retirement income knowledge and innovativeness of one of the world’s largest insurance organisations,” says Todd Solash, President, Individual Retirement, AIG. “By adding the PIMCO Global Optima Index to our Power Series Index Annuities, individuals can enjoy the same level of principal protection they have today, while potentially benefiting from more growth opportunities.”
 
To help boost returns, the Index uses an alternative (also known as “smart beta”) approach to equity rebalancing. Equity weightings are rebalanced monthly, using market size or capitalisation as a starting point and favouring those sectors that have experienced strong gains (momentum) or appear to be underpriced (value). Allocations between equities and fixed income are then adjusted daily for risk management.
 
The Index aims for a high equity allocation in up markets and has the ability to allocate up to 100 per cent equities. In down markets, allocations can be quickly shifted to fixed income to help reduce risk. Cash may also be used in times of extreme market volatility.
 
“We have a history of managing global quantitative strategies and sought to incorporate our investment insights into the construction of this new index,” says Robert Young, head of PIMCO’s US Financial Institutions Group. “The PIMCO Global Optima Index is one of the first global quantitative indices to incorporate momentum and value signals to be made available in this market. We are happy to partner with AIG to introduce it throughout the US.”
 

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