Nationwide Adds BNP Paribas Global H-Factor Index To FIA
May 17, 2022 by Nationwide
Columbus, OH—May 16, 2022—Nationwide announced today the addition of the BNP Paribas (BNPP) Global H-Factor® Index to the Nationwide Peak® 10 fixed indexed annuity (FIA). The index offers a probability-based approach to investing by identifying and removing potentially overpriced stocks likely to lose value due to human behavior, resulting in a portfolio made up of equities more likely to deliver growth. This makes the index from BNP Paribas, a premier global bank, uniquely positioned to fit the emerging needs of financial professionals and their clients in today’s challenging economic environment.
“As retirement nears, it can be difficult for investors to balance their desire for additional growth with the need for protection from negative market performance,” said Eric Henderson, president of Nationwide Annuity. “The new BNPP Global H-Factor index is an effective solution to help mitigate risk while still providing growth potential, especially for those clients nearing retirement at a time in their financial lifecycle when losses can be hard to recoup.”
Using an innovative methodology developed by asset management company New Age Alpha, the BNPP Global H-Factor Index identifies overpriced stocks due to the H-Factor, or Human Factor. The H-Factor is a risk that comes from investors interpreting vague or ambiguous information about a company in an incorrect way, which can lead to overpricing and may make it difficult for a company to deliver the growth implied by the current stock price.
To counter this, the BNPP Global H-Factor Index evaluates more than 4,000 equities once a quarter using the last 12 quarters of financial data and the current stock price to determine how likely it is that the implied growth rate can be achieved. Those equities with high H-Factors (companies with a higher probability of failing to deliver implied growth) are removed, leaving the best 225 from the original list of 4,000. The remaining 225 equities are then weighted so that the best potential performing stocks have greater impact.
“Investors in indexed annuities are seeking a more innovative approach to global equity exposure,” said Ryan Cullen, Head of Insurance Solutions Sales at BNP Paribas. “Our team is excited to be working with New Age Alpha to deliver a differentiated index strategy to Nationwide.”
Julian Koski, New Age Alpha co-founder and chief investment officer, added, “We’re thrilled to partner with BNPP and Nationwide to incorporate our probability-based rules into investment portfolios, systematically avoiding the H-Factor, or human behavior risk.”
The BNPP Global H-Factor Index is joining four other indexes available within the Nationwide Peak 10 FIA, which launched in January 2021. Peak 10 is one of the latest additions to Nationwide’s diverse product lineup, and its first annuity in partnership with AmeriLife, a national leader in developing and distributing annuities and retirement planning solutions.
“When the Nationwide Peak 10 fixed indexed annuity was first introduced, we were thrilled to offer this unique financial solution to clients,” said Pat Fleming, executive vice president and corporate actuary of AmeriLife. “As the exclusive distributor of Peak 10, AmeriLife couldn’t be more excited with the addition of the BNPP Global H-Factor index, which will deliver even greater flexibility and diversity of choice to clients through this industry-leading offering.”