NATIONWIDE PEAK® 10 FIXED INDEXED ANNUITY
J.P. Morgan CycleSM Index
The J.P. Morgan Cycle℠ Index is designed to allocate to the style of stocks that have historically performed well during each phase of the business cycle.
Objective: Allocate to stocks and bonds based on the business cycle
Approach: “Smart beta” and cycle rotation
Holdings: Domestic equities and bonds
Features: The equity allocation rotates between different “smart beta” factors based on the business cycle.
Equity style rotation tailored to the business cycle
The J.P. Morgan CycleSM Index provides timely allocation between domestic-focused equities and bonds based on various factors, market conditions, and the current phase of the business cycle. This equity style rotation is designed to overweight the portfolio to the style of stocks that have historically performed well during each phase of the business cycle.
How this investing style works
The J.P. Morgan CycleSM Index is made up of five portfolio components. The index regularly rebalances among them based on the specific phase of the business cycle in order to achieve the highest equity weighting and maintain a 5% volatility target.
Each month, the index identifies the current phase of the business cycle based on leading and lagging economic indicators and chooses the corresponding equity constituent.
Rebalance between stocks and bonds to maintain stable volatility over time.
Rebalance mid-month between stocks and bonds when conditions change dramatically.
* The J.P. Morgan Cycle Index was established [November 02, 2020]. All performance shown is backtested by applying the index strategy, which was designed with the benefit of hindsight, to historical financial data when all components became available. Backtested performance is hypothetical and has been provided for informational purposes only. Past performance is not indicative of nor does it guarantee future performance. The hypothetical data above reflects the 0.5% p.a. index fee.
Please refer to Nationwide Peak 10 product materials for more information.
How allocations change with conditions
The J.P. Morgan CycleSM Index is designed to have higher equity allocations when the market is stable and higher bond allocations when the market becomes more volatile.
During an economic recovery with a volatile market, the index was invested in value stocks with a large percentage in bonds.
During an economic expansion with a stable market, the index was invested pretty evenly between momentum stocks and bonds.
During an economic contraction with a volatile market, the index was invested in quality stocks with a large percentage in bonds.
During an economic slowdown with a volatile market, the index was invested in low-volatility stocks with a large percentage in bonds.
Impact of Lower Volatility
Indexed annuities typically credit earnings in one-year or two-year increments. In times of high volatility, providing any credit can be a challenge for some traditional market indexes. The J.P. Morgan Cycle Index is designed to keep volatility low and, over time, its more consistent returns may offer greater growth potential, regardless of the cap or participation rate selected.
One-year Increments – Capped returns
Comparing returns inside and outside of the fixed indexed annuity.
Two-year Increments – Participation Rate with Spreads
The current environment of market volatility may provide higher positive results using two-year terms with spreads.
*Past performance is not an indication of future results. The actual and hypothetical backtested returns of each 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 12/01/2004 through 11/18/2020 for a total of 3.503 rolling two-year periods. Performance assumptions: S&P 500 Index: 1.50% spread with a 40% participation rate; J.P. Morgan Cycle Index: 1.50% spread with a 100% participation rate.
How this investing style has performed in the past
Hypothetical and actual historical performance: December 2004 to August 2020
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