Nationwide Innovations in Annuities: Linking to Actively Managed Funds

Nationwide, in collaboration with Annexus, has made a groundbreaking move by linking its fixed indexed annuity (FIA) offerings to an actively managed mutual fund.

In a first within the industry, Nationwide's New Heights Select product line is now incorporating the performance of the American Funds Growth Fund of America, managed by Capital Group. Notably, policyholders do not directly invest in or own shares of the fund; instead, the fund's performance influences their annuity's crediting strategy. This innovative approach continues Nationwide and Annexus's previous initiative in the registered index-linked annuity (RILA) sector, where they introduced the first RILA tied to an actively managed mutual fund.

Expanding Annuity Options

Nationwide has also broadened its New Heights Select annuity offerings with the introduction of two new crediting choices. These options include the S&P 500 Distance Stabilizer Index and the Goldman Sachs-developed GS American Funds GFA 15% Index. This latter index is based on the performance of the Growth Fund of America and incorporates a volatility-control feature, highlighting Nationwide's commitment to risk-managed growth strategies.

"These enhancements provide financial professionals and their clients with new growth opportunities within a risk-managed framework, maintaining full protection of principal against market losses."

Stacy LaiFook, Vice President of Nationwide Annuity Business Development

Industry Implications and Future Trends

Nationwide's innovative approach indicates a shift towards more sophisticated annuity products among insurance carriers. The blending of mutual fund strategies into annuities provides a nuanced growth opportunity for clients while safeguarding their principal. Other companies are also adopting similar strategies. For example, Lincoln Financial's decision in 2025 to tie a fixed indexed annuity to a Capital Group exchange-traded fund (ETF) further underscores this industry trend.

Adding further value, Nationwide has bolstered its High Point 365 Select Lifetime Income Rider with Bonus. The roll-up rate on certain contracts within the New Heights Select range has been increased from 9.5% to 10%. This presents an attractive proposition for policyholders looking to maximize their growth potential.

Key Developments in Nationwide's Annuity Product Line

• First FIA strategy linked to an actively managed mutual fund.
• Introduction of new crediting choices: S&P 500 Distance Stabilizer Index and GS American Funds GFA 15% Index.
• Increased roll-up rate for High Point 365 Select Lifetime Income Rider with Bonus.

As the insurance industry continues to evolve, the integration of actively managed fund strategies highlights a significant innovation. This opens new avenues for growth under protection, benefitting both financial professionals and their clients.