MSCI targets US annuity market with new vol control indexes

MSCI has announced a collaboration with Salt Financial to create risk-controlled index solutions for insurance companies using Salt's patent-pending truVol Risk Control Engine (RCE).

‘Our common ambition is to deliver innovative index solutions designed to address investors' needs and investment targets," said Stephane Mattatia (pictured), global head of thematic indexes and derivatives licensing at MSCI. The partnership seeks to respond to increased demand for indexed retirement products fuelled by an aging population, volatile and uncertain markets, and investors' desire for principal-protected products.

The new indexes will use of historical intraday data for volatility forecasting from truVol which is designed to help increase volatility targeting accuracy and responsiveness for risk control indexes. The parties intend to create new ‘differentiated risk control indexes’ for the indexed annuity market.

Tony Barchetto, CEO, Salt Financial, said the truVol Risk Control Engine (RCE) is a risk management toolkit designed to target volatility in risk-controlled index strategies using historical intraday data to help ‘increase targeting accuracy and responsiveness, aiming to improve product participation rates and outcomes for annuity investors’.