Getting Personal: The Promise of Portfolio Protection
Wall Street Journal Online (08/28/02) ; Kim, Jane J.

Financial institutions offer a variety of hybrid securities that protect the original investment and offer the possibility of market gains, and they are proving quite popular with investors, but they are not designed for all investors and sometimes include high fees and long-term lockdowns. Equity-indexed annuities, for instance, try to generate returns between what one would get from stocks and from bonds, explains Advantage Group President Jack Marrion, noting that investors bought over $6.5 billion of them last year and are expected to buy $10 billion worth this year. Investors should determine how the insurer handles the participation rate of the annuity, and how the guarantee on the annuity is calculated--an annual reset is a good strategy if the investor thinks the markets will go up, but could damage gains in a bad year, this column says.


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