An AIG news release said that the new offerings, with maturity dates from five to 15 years, are designed for investors seeking the growth potential of equity markets and to assist investors in achieving their long-term savings goals with some protection from equity-market volatility.
The new funds combine equity exposure with fixed income investments in various combinations depending upon the maturity date of the fund. Investors who hold shares to maturity and reinvest all dividends and distributions, get the highest net asset value attained during the life of the fund adjusted for extraordinary expenses, the company announcement said.
The High Watermark Funds are managed using a proprietary investment approach that dynamically allocates assets in varying proportions to S&P 500 index futures, non-callable US government securities, and high-grade money market instruments, capturing exposure to equities’ long-term growth potential while also maintaining value protection, the news release said.
The announcement said that the new offerings differ from target maturity funds in several ways:
- A typical target maturity fund offers no loss protection for principal or net gains during the life of the fund.
- The High Watermark Funds’ investing strategy is fully executed and managed within the fund.
- The High Watermark Funds use S&P 500 index futures to achieve broad-based equity exposure and avoid both security selection and sector risk.
- The High Watermark Funds use primarily non-callable US government securities to generate the potential for current income and to avoid the possibility of credit risk.
AIG VALIC serves 25,000 retirement client groups and more than two million participant accounts.
More information about the company is at http://www.aigvalic.com/valic2004/valicsites.nsf/contents/gaigvalic_home .