Products November 16, 2009

MetLife, Fidelity Team up for Retirement Income Solution

MetLife and Fidelity Investments have introduced a new deferred variable annuity product designed for individuals who are either retired or transitioning to retirement.

Reported by

The MetLife Growth and Guaranteed Income (MGGI) variable annuity is distributed exclusively through Fidelity and is the only deferred variable annuity with a living benefit sold through the company, according to a press release. MGGI allows individuals approaching or living in retirement to use a portion of their assets, either from a 401(k), 403(b), IRA, or other savings, to purchase guaranteed lifetime income for themselves or their spouses.

The product provides growth potential when the market improves and downside income protection if the market declines, according to the announcement. Individuals also retain control of their assets and can access a portion of their account value at any time during the contract.

MGGI is backed by MetLife and includes a built-in guaranteed withdrawal benefit for life and a death benefit that allows individuals to leave assets to their beneficiaries. It features the Fidelity VIP FundsManager 60% Portfolio, an investment option that offers exposure to multiple asset classes in one investment. The “fund of funds” portfolio invests in more than 30 mutual funds and maintains an appropriate target asset allocation mix of 60% in equities, 35% in fixed income investments, and 5% in money market portfolios.

The minimum single premium is $50,000, and all annuitants must be between the ages of 50 and 85.

The guaranteed withdrawal benefit for life provides for a set withdrawal rate determined by the age at first withdrawal on or after age 59½: 4% for ages 59½ – 64; 5% for ages 65 – 75; or 6% at age 76 or older.

Fees and charges for MGGI include an annual annuity mortality and expense charge for single and joint life coverage of 1.90% and 2.05%, respectively; underlying fund expenses (currently 0.84%); and a surrender charge of 2% for the first five years. Surrender charges do not apply to guaranteed withdrawal benefit amounts, annuitizations, and death benefits, and all fees and charges are deducted from or reduce the account balance. There are no maintenance fees or initial sales charges for the product.

More information is available at www.fidelity.com/incomeplus.

The Markets November 16, 2009

Institutions, Advisers Still Like Alternatives, but Are More Cautious

A survey by Morningstar, Inc., and Barron's magazine found that despite questionable performance during the market downturn and hedge fund scandals, institutional investors and advisers still view alternative investments optimistically, although with greater scrutiny.

Reported by

More than 60% of institutions and advisers indicated that alternatives will be as important or more important than traditional investments over the next five years, according to a Morningstar release of the survey. The majority of institutions and advisers expect alternatives to account for more 10% of their portfolios over the next five years, with a quarter of institutions expecting alternatives to account for more than 25% of their portfolios.

For both institutions and advisers, the top three reasons for investing in alternatives remain the same as in last year’s survey: portfolio diversification, absolute returns, and exposure to different investment techniques, such as arbitrage or shorting. Institutions and advisers are much more concerned, however, about lack of liquidity and transparency than they were last year, the release said.

Hedge funds were the most popular alternative vehicles over the last five years, and institutions and advisers expect to continue to increase allocations to hedge funds over the next five years.

Both institutions and advisers tend to classify investments as “alternative” based on the investment’s strategy (i.e. absolute return), rather than the investment’s designation (i.e. mutual fund versus hedge fund). Compared to the 2008 survey, fewer institutions and advisers view real estate investment trusts and commodities as alternative asset classes.

Morningstar and Barron’s conducted the Web-based survey in late September through early October, among 89 institutions and 300 financial advisers. Survey results appear in the November 9 issue of Barron’s and online at Barrons.com. Additional results, including charts, can be viewed online at http://global.morningstar.com/2009Alternatives.

«