Annuities offer long-term investors the dual benefit of equity market participation and downside protection, making them a natural fit for MarketGrader’s fundamentally driven indexes. Whether in the form of Fixed Indexed Annuities (FIAs) or Variable Annuities (VAs), carriers and platform sponsors can leverage MarketGrader’s scalable, rules-based index IP to deliver growth-oriented solutions backed by a proven stock selection framework.

A Smarter Growth Engine for the Accumulation Phase

Most annuity contracts rely on a broad-based benchmark index—such as the S&P 500—to fuel the accumulation period. MarketGrader offers a differentiated, alpha-generating alternative. Our core indexes are built to deliver superior long-term returns by systematically selecting the highest-quality companies using our GARP + Quality methodology. Unlike cap-weighted benchmarks, MarketGrader indexes rebalance semiannually to maintain portfolio discipline and quality, giving annuity contract holders exposure to a curated portfolio of exceptional businesses, not just the largest ones.

This translates into an improved upside/downside capture ratio, which is particularly valuable in contracts that cap the investor’s upside while offering downside protection. By starting with a better engine, insurance companies may be able to offer richer crediting rates, more competitive participation terms, or greater flexibility in structuring upside ceilings—while maintaining their profitability.

Designed for Decumulation Too

Drawdown risk is especially damaging during the annuitization (or decumulation) phase. MarketGrader has developed a suite of broad, diversified core indexes that are specifically designed to mitigate downside risk while preserving exposure to long-term equity growth. These indexes can be used to help insurance carriers structure guaranteed income products that limit volatility during the most critical period of an investor’s life cycle.

Unlike concentrated or narrow indexes, these core indexes are well-suited for annuity mandates, given their ample diversification, high investment capacity, and underlying methodology that prioritizes sustainable earnings, profitability, and reasonable valuations.

Fully Hedgeable, Operationally Viable

For any annuity product to be viable, it must be hedgeable. Many insurers use index-linked derivatives—such as options or futures—to manage their exposure. MarketGrader indexes are designed with market betas comparable to traditional benchmarks, making them compatible with existing derivative instruments. For example, S&P 500 contracts may be used to hedge exposure to a MarketGrader US Core Index due to their similar volatility profiles. This allows insurers to maintain their existing risk management infrastructure while offering a differentiated index solution.

Ideal for Variable Annuities and Lifetime Income Riders

In the variable annuity space, MarketGrader indexes offer portfolio managers and insurance subadvisors the ability to deliver institutional-quality, transparent strategies as investment options. Because our methodology is rules-based and consistent across all markets, it enables global diversification through the same intellectual framework—making it easier to communicate the benefits to advisors and contract holders alike.

Summary of Key Benefits

• Superior upside/downside capture for contracts with participation or return caps
  
• Downside mitigation during the decumulation phase
  
• High-capacity, diversified indexes suitable for large-scale annuity products
  
• Derivative compatibility for hedging using existing instruments
  
• Consistent methodology across US, developed, and emerging markets
  
• Operational transparency for both regulators and insurers
  

A Better Index Option for Today’s Annuity Market

Most insurance carriers continue to rely on outdated, cap-weighted benchmarks that offer no edge to clients. MarketGrader provides a differentiated, license-ready alternative—one that’s scalable, transparent, and designed for modern annuity structures.