The Bull Bear Model

The Bull Bear Model

Why pay for it? Why risk it?

The Bull/Bear model is an investment strategy commonly used by brokers and fund managers. The concept involves utilizing long-term, low-activity portfolio management with differing investments specific to Bull and Bear markets. Portfolio allocations are adjusted at the indication of a Bullish or Bearish trend during an interval established by the portfolio manager, typically quarterly.  Volatility thresholds are set which prompt allocation adjustments. The intention is to be invested in higher performing equities during Bull Markets and safer fixed income bonds during Bear Markets.

Annuity producers, does this sound familiar?

The new standard in the financial insurance industry involves rules-based multi-asset crediting strategies designed and administered by highly recognizable financial institutions. These dynamic strategies set volatility thresholds which influence daily reallocations between a number of different asset classes, equities, fixed income, and cash positions. The rules-based process eliminates the human component in order to follow a disciplined system for rebalancing allocations based on factors such as market capitalization, momentum, and value. A more recent trend which is gaining momentum utilizes artificial intelligence to manage portions of the predictive elements of the rebalancing effort. Insurance carriers have injected a bit more sophistication into a process which traditionally is driven by hunches and “gut feelings”.  

The back testing and illustrated rates on multi-asset crediting strategies have been outstanding. Due to an industry wide adoption of participation rates and spreads in favor of antiquated annual caps, the credited returns on real life in-force policies have generally supported the historical data. Renewal rates for the most part have remained competitive, which indicates actuarial sound and responsible pricing from strategy designers and carriers. In part, all these factors lend policy holders an opportunity for safe, aggressive performance essentially unprecedented in the financial landscape. 

Fundamentally, rules-based multi-asset crediting strategies are the Bull/Bear model neatly wrapped up inside a guaranteed insurance product. The best part is your clients will not be subject to loss due to market volatility, won’t have to pay costly management fees, and will be subject to an infinitely more sophisticated method for rendering competitive results

Insurance carriers employ some of the best fund managers in the world. They are responsible for investing billions of dollars which help guarantee the safety we enjoy from financial life insurance products. Fixed indexed annuities offer safe growth with minimum guarantees, liquidity, and an array of attractive living benefits including guaranteed lifetime income, chronic/critical illness benefits, and enhanced death benefits. Rules-based multi-asset crediting strategies have successfully dispelled the notion that fixed indexed annuities offer safety for the price of ultra-conservative, mediocre returns. Why would you pay a broker to take on risk when you can get the same investment concept with zero risk and zero fees managed by the best fund managers in the world?