Alternative Investments: Insurance Giant Allianz Launches Risk-Managed ETFs
Allianz’ new line-up is a pair of buffered outcome ETFs.
Allianz Investment Management, a subsidiary of Allianz Life Insurance Company of North America, announced Monday the launch of its new ETF product line. (Traders Magazine)
AllianzIM buffered outcome ETFs
The new ETFs address investors’ concerns regarding risk in the current environment from heightened volatility because of the virus outbreak.
They, therefore, include features such as buffers, caps, and index-linked returns. These inspire confidence in the investors regarding the safety of their capital.
The ETFs protect investors from a loss shock (up to a known buffer value) on the one side. However, they also let them participate in the gains from a rally (up to a cap) on the other.
(Learn more about how defined outcome buffer strategies work in this interview of Jeffrey Chang of CBOE Vest by Tim Melvin)
Risk is Allianz’ forte because it manages over $145 billion in hedged assets and straddles both insurance and capital markets.
The two new ETFs are:
- AllianzIM U.S. Large Cap Buffer10 Apr ETF (NYSEARCA: AZAA)
- AllianzIM U.S. Large Cap Buffer20 Apr ETF (NYSEARCA: AZBA)
The expense ratio of both the ETFs is 0.74%, with the management of their portfolios conducted inhouse at AllianzIM.
Reduced downside risk
The ETFs aim to match the returns of the S&P 500 Price Return Index up to a stated Cap, while providing downside protection (through the Buffer) against the first 10% and 20% of S&P 500 Price Return Index losses for AZAA and AZBA, respectively.
“Our ETF offerings seek to provide a clearer path of return expectations by providing a level of downside protection over a defined time period,” said Brian Muench, president of AllianzIM. “The ability to remain invested in broad based equities while reducing downside risk in an ETF vehicle is creating strong interest from financial professionals.”
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