BNP Paribas Global H-Factor Index

The BNP Paribas Global H-Factor® Index, available within the Nationwide Peak® 10 fixed indexed annuity, attempts to achieve balance by systematically avoiding companies at higher risk of failing to deliver the growth needed to support their stock price.

How this investing style works

Invest with the power of probabilities

Using a probability-based methodology, the BNPP Global H-Factor® Index seeks to identify when the H-Factor® (investor behavior) has overpriced the stock. It calculates the probability that a company will fail to deliver the growth needed to support its stock price. It then refines the equity portion within the index to remove those equities with a higher probability of failing to deliver the returns needed to support their stock price.

Calculates implied growth rate

The H-Factor® methodology calculates the implied growth rate for each stock based on known financials and the current stock price.

Compares against historical data

Then for each stock, the implied growth is compared with historical growth rates from the past 12 quarters.

Determines H-Factor® score

Finally, an H-Factor® score, the probability that a stock will fail to deliver the implied growth rate, is assigned for each stock. The lower, the better.

Where is the BNPP Global H-Factor Index Available? 

This state availability map shows a breakdown of which states have been approved for Nationwide Peak 10 with specific surrender charges and which states are pending.

How this index lessens the H-Factor®

Each quarter, the BNPP Global H-Factor® Index evaluates global equities from four major developed markets within the S&P Developed Broad Market Index (BMI) and refines the equity portfolio by applying the H-Factor® methodology. Here’s a more detailed look at how the BNPP Global H Factor® Index combines innovative equity selection with a daily risk control methodology to offer a balance of growth and risk management

Adjust using a fixed component to further reduce risk

Lastly, in order to maintain a target 5% volatility, the index applies a risk control methodology that makes daily adjustments to allocate between the H-Factor® equities, U.S. Treasuries, and a hypothetical cash position.

2 Approximately 4,000 stocks are evaluated. U.S. stocks must have a minimum of $5 million 6-month average daily trading value and at least a $3 stock price to be eligible. Non-U.S. stocks must have a minimum $1 million 6-month average daily trading value and a minimum market cap of $100 million.

Putting actuarial principles to use within Nationwide Peak® 10

Annuities typically credit earnings in one-year or two-year increments and apply cap or participation rates. When you consider the backtested returns of the BNPP Global H-Factor® Index within the Nationwide Peak® 10 fixed indexed annuity using two-year terms and a 100% participation rate on the index, the compound annualized growth was to 11.92% and would have credited earnings nearly 90% of the time.3

3The hypothetical backtested returns of the index are used to create a hypothetical performance for indexed annuities offering a two-year point-to-point crediting strategy with assigned participation rates linked to each index over the period of 06/01/2006 through 12/31/2021 for a total of 3,527 rolling two-year periods. Performance assumptions: BNPP Global H-Factor® Index 1.50% spread with a 100% participation rate.

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