Variable Annuity Marketers Switch to ETFs

Variable annuity marketers are moving to ETFs after getting by burned active mutual fund managers.

In the WSJ story Laggards Get the Boot, Journal reporters Leslie Scism and Diasy Maxey write that insurance companies that offer variable annuities are making the switch after experiencing hedging issues with underperforming actively managed mutual funds.

The poor tracking of the funds caused the insurance companies to take billions of dollars in charges and moved them to switch to ETFs because they are easier to hedge and also less expensive.

Dutch insurer Aegon NV is now offering asset allocation portfolios built with Vanguard ETFs while MetLife is using State Street ETFs.

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