Further diversification means exploring the alternatives.
Today´s economic landscape is forcing us to reconsider what we thought we knew about diversification1. We've discovered that traditional asset classes can behave similarly in periods of economic volatility, which historically has been bad when they´re trending downward. But alternative asset classes and strategies frequently behave differently from traditional assets under the same market conditions. That means adding alternatives could help you diversify to manage portfolio risk.
View our lineup of alternative investments here.
|1||Diversification does not assure a profit or protect against loss in a declining market.|
Standard deviation is known as "historical volatility" and is used to gauge the amount of expected volatility or risk.* So, the lower the standard deviation percentage, the lower the risk. See what can happen to risk and returns when exposure to alternatives is increased.
Portfolio comparison from 12/31/1995-12/31/2012, and provided by Lipper, a Thomson Reuters Company. This chart is for illustrative purposes only and is not indicative of any investment. No assumptions should be made that similar asset allocations will be profitable, suitable, or perform as indicated above. Allocations and their percentages may change based on an individual investor’s needs. The indices used to determine return and risk figures for the portfolio shown are as follows: Stocks=50%/32.5%/17.5% mix of S&P 500 Index, MSCI EAFE® Index and Russell 2000® Index; Bonds=Barclays Capital Aggregate Bond Index; and Alternatives=equal mix of Dow Jones® Credit Suisse Global Mac Hedge Fund Index, Dow Jones Credit Suisse Long/Short Equity Hedge Fund Index, Dow Jones Credit Suisse Multi Strategy Hedge Fund Index, JP Morgan EMBI Global Diversified Index, Dow Jones Credit Suisse Event Driven Hedge Fund Index, Dow Jones UBS Commodity Index, Dow Jones Credit Suisse Managed Futures Hedge Fund Index, and the FTSE EPRA/NAREIT Developed Index. The performance of the alternative allocation does not represent the actual performance of the portfolio or the current investment allocation of the portfolio. Indices are unmanaged and are not available for direct investment. Indices do not reflect fees and expenses associated with the active management of a portfolio.
The following chart illustrates how asset classes typically perform differently from each other over time. Investing in a wide range of traditional and alternative asset classes can improve diversification and reduce overall portfolio volatility.
Diversification does not assure a profit or protect against loss in a declining market.
|Bonds (Barclays Capital U.S. Aggregate Bond Index) Composed of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years.|
|Commodities (Dow Jones-UBS Commodity Index) Designed to be a highly liquid and diversified benchmark for the commodity futures market and is composed of futures contracts on 19 physical commodities.|
|Convertible Arbitrage (Dow Jones Credit Suisse Cnvrt Arb Hedge Fund USD) A subset of the Dow Jones Credit Suisse Hedge Fund Index that measures the aggregate performance of convertible arbitrage funds.|
|Covered Calls (CBOE S&P 500 Buywrite (BXM) Designed to reflect the return on a portfolio that consists of a long position in the stocks in the S&P 500 Index and a short position in an S&P 500 (SPX) call option.|
|Emerging Market Debt (JPM EMBI Global Diversified Index) Designed to limit asset-weighting of larger debt Designed to limit asset-weighting of larger debt issuers, the index is intended to measure the performance of emerging market bond issuances from around the world.|
|Emerging Market Equity (MSCI Emerging Markets Index) Designed to measure equity market performance in global emerging markets, is a float-adjusted market capitalization index and consists of indices in 26 emerging economies.|
|Global Infrastructure (Dow Jones Brookfield Global Infrastructure TR) Measures the stock performance of companies that exhibit strong infrastructure characteristics, defined as those that derive 70% or more of their cash flows from infrastructure lines of business.|
|Gold Equity (FTSE Gold Mines TR) Designed to reflect the performance of the world wide market in the shares of companies whose principal activityis the mining of gold.|
|International Equity (MSCI EAFE Index) Comprises 21 MSCI country indices, representing the developed markets outside of North America. The country indices included are those from Europe Australasia and the Far East.|
|Listed Private Equity (S&P Listed Private Equity TR) Comprised Comprised of 30 leading listed private equity companies, the index is designed to provide tradable exposure to the leading publicly listed companies in the asset class.|
|Managed Futures (Dow Jones Credit Suisse Managed Futures Hedge Fund Index) An asset-weighted index that seeks to measure the aggregate performance of managed futures funds.|
|Merger Arbitrage (Dow Jones Credit Suisse ED Rsk Arb Hedge Fund USD) A subset of the Dow Jones Credit Suisse Hedge Fund Index that measures the aggregate performance of risk arbitrage funds.|
|Natural Resources (S&P North American Natural Resources Sector TR) A modified capitalization weighted index of U.S. traded Natural Resources equity securities.|
|Real Estate (FTSE EPRA/NAREIT Developed Index) Tracks the performance of listed real estate companies and REITS worldwide.|
|U.S. Equity (Russell 3000® Index) Measures the performance of the 3,000 largest U.S. companies— approximately 98% of the investable U.S. equity market.|
Dow Jones® and the Dow Jones branded indexes identified herein are trade and/or service marks of CME Group Index Services LLC (“CME Indexes”), its affiliates, and/or licensors, as the case may be, and have been licensed for use by Jackson National Life Insurance Company. The product(s) referenced is/are not sponsored, endorsed, sold or promoted by CME Indexes, its affiliates, and/or licensors, or their respective affiliates, and such parties make no representations or warranties, express or implied, regarding the advisability of trading in the product(s).
This example is for illustrative purposes only and is not representative of the future performance of any particular product. Past performance is no guarantee of future results. The indexes described are unmanaged and not available for direct investment. Source: Lipper, a Thompson Reuters Company, as of 12/31/2012. All index returns portray total return data.
Alternative investments have not been readily accessible to a large segment of individual investors due to high minimum investment limits and restrictive investor requirements. But private institutions and Ivy League schools have had access to alternatives for decades – marrying them with traditional investments.
While the alternative investments found within Elite Access® are not identical to those the endowments have been using for years*, they are generally less correlated with traditional investments. This means they may perform differently from each other under the same market conditions and can provide further diversification1, lower portfolio volatility, and potentially increase returns. We're proud to offer alternatives managed by some of the most well known professionals in the industry.
|*||Source: From 6/30/2002-6/30/2012, an equal-weighted average of 506 University Endowments returned 6.2%, compared to the S&P 500 Index average return of 5.3%. 2012 NACUBO Endowment Study, Annual Report of the National Association of College and University Business Officers of Endowment Performance and Management in Higher Education, 2013. The S&P 500 Index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.
|1||Diversification does not assure a profit or protect against loss in a declining market.|
A variable annuity is a long-term, tax-deferred investment designed for retirement, involves investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½.
Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.
Diversification does not assure a profit or protect against loss in a declining market. Portfolios that have a greater percentage of alternatives may have greater risks, especially those including arbitrage, currency, leveraging, and commodities. This additional risk can offset the benefit of diversification.
Although asset allocation among different asset categories generally limits risk and exposure to any one category, the risk remains that management may favor an asset category that performs poorly relative to the other asset categories. The subaccounts expect to invest in positions that emphasize alternatives or nontraditional asset classes or investment strategies and, as a result, are subject to the risk factors of those asset classes. Some of those risks include general economic risk, geopolitical risk, commodity-price volatility, counterparty and settlement risk, currency risk, derivatives risk, emerging markets risk, foreign securities risk, high-yield bond exposure, noninvestment-grade bond exposure, index investing risk, industry concentration risk, leveraging risk, market risk, prepayment risk, liquidity risk, real estate investment risk, sector risk, short sales risk, temporary defensive positions, and large cash positions.
The investment companies (subaccounts) offered in Elite Access are registered as investment companies under the Investment Company Act of 1940, as amended (“1940 Act”), and their shares are registered under the Securities Act of 1933, as amended. There are many differences among 1940 Act registered subaccounts and unregistered hedge funds, including but not limited to liquidity, restrictions on leverage and diversification, fund reporting and transparency, fees, and availability.
The standard death benefit is equal to contract value on the date of the claim and does not include any additional guarantees.
The latest income date allowed is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a contract.
Elite Access Fixed and Variable Annuity (VA650, VA660) is issued by Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and in New York (VA650NY, VA660NY) by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. This product has limitations and restrictions, including withdrawal charges and excess interest adjustments (interest rate adjustments in New York) where applicable. Jackson issues other variable annuities with similar features, benefits, limitations and charges. Discuss them with your representative or contact Jackson for more information.
Jackson is the marketing name for Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York.
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