Jefferson National Expands Lineup of Alternative Investment Options to More Than 65; Continues as Industry’s Leading Tax-Deferred Investment Solution for RIAs and Fee-Based AdvisorsInnovative Flat-Fee VA Helps Advisors Overcome Tax-Inefficiencies of Alternative Strategy Funds including Tactical Solutions, Innovative ETF Portfolios, Hedging and other Risk Management Strategies
Louisville, KY—May 14, 2012—Jefferson National, a recognized innovator of products and services for Registered Investment Advisors (RIAs) and fee-based advisors, continues leading the industry in providing tax-deferred investment options to meet advisors’ growing need to overcome the inherent tax-inefficiencies of many alternative asset classes and alternative strategies. Jefferson National is the first and only variable annuity to offer alternative investment options from BFP Capital Management, W.E. Donoghue and Hatteras Funds, as well as adding even more alternative investment options from such market leaders as Invesco, Legg Mason, Janus, Fidelity Investments and Wilshire Funds Management. Jefferson National’s Monument Advisor, the industry’s first flat-fee variable annuity1 with 9x more funds than the typical VA2, now tops more than 65 tax-deferred funds in the Alternatives category, the most of any variable annuity3, including more tactical solutions, innovative ETF portfolios, hedging and other risk management strategies.
“A growing number of RIAs and fee-based advisors are using alternatives to achieve greater diversification and downside protection in this challenging market—and our surveys show that nearly two-thirds of advisors think alternatives will become more important than traditional asset classes,” said Laurence Greenberg, President, Jefferson National. “But as we recently discussed with a panel of industry experts at the NAPFA National Conference, for many advisors tax-inefficiency can be a big barrier to using alternatives. That’s why Jefferson National’s low-cost approach to tax-deferral is the solution trusted by a growing number of RIAs and fee-based advisors. Our latest addition of alternative strategy investment options goes right to this point.” Jefferson National’s panel discussion “Alternatives, Next Generation ETFs and the Tax-Efficient Frontier: New Tools for the New Normal” helped demonstrate how advisors can use simple strategies like the tax-efficient frontier to improve the performance potential of alternative strategies.
“We find that investors are not necessarily risk-adverse but rather loss-adverse, desiring lower volatility and greater flexibility. Our methodology seeks to manage overall market volatility, while constantly searching for a bull market wherever it may be, to raise the investment comfort level of our investors,” said David Haviland, Portfolio Manager, BFP Capital Management. “We are delighted to offer our Decathlon suite at Jefferson National. Our strategies are nimble which can cause a fair amount of short-term capital gains. Jefferson National’s flat-fee VA defers these high tax rates to allow investors the full advantages of our strategies.”
With its monthly-trading, derivatives-based approach, Invesco’s Balanced-Risk Allocation Fund is well-suited for a tax-deferred vehicle. “The portfolio is built to have more defensive qualities than a traditional portfolio and seeks to limit downside exposure while participating in more attractive environments,” said Scott Wolle, CIO, Invesco Global Asset Allocation. “In times of uncertainly it is important to be prepared for all possible outcomes. This is the rationale behind the Invesco Balanced-Risk Allocation Fund, which balances portfolio risk equally among developed equities, long-term government bonds and commodities.”
The new fund additions complement a comprehensive lineup of more than 380 tax-deferred funds across a broad range of 59 Morningstar categories, featuring more than 65 Alternative Investment funds, 60 Fixed Income funds, over 60 Asset Allocation funds, more than 35 International Equity funds and over 190 US Equity funds. Jefferson National’s flat fee VA provides access to more than 46 different money managers, and has offered the variable annuity industry’s most subaccounts with the 5 star and 4 star Morningstar Rating™ for three consecutive years4.
“Our new fund additions come from both industry innovators and recognized market leaders, making Jefferson National a key tax deferral solution for top fund companies,” continued Mr. Greenberg.
Research has shown that a low-cost tax-deferred vehicle can improve performance potential of tax-inefficient management strategies and asset classes by as much as 100 bps—without increasing risk5. Jefferson National’s Monument Advisor, is a leading tax-deferred investing solution now used by a growing network of more than 1,650 RIAs and fee-based advisors nationwide. As surveys confirm that RIAs and fee-based advisors are turning to alternatives and tactical strategies6 and focusing on risk management7 to confront the market’s ongoing volatility, Jefferson National continues to expand its lineup of funds with the addition new tax-deferred alternative strategy investment options.
First and Only New Alternatives from Industry Innovators
In an industry first, Jefferson National will be the first and only VA to offer the all new BCM Decathlon Series of three, quantitative, ETF-based strategies that provide clients with a unique, tactical global allocation investment program designed to target and stay within each investor’s desired level of risk. Using pattern recognition technology, the quantitative engine tracks and ranks 107 hand-picked ETFs. It then selects the 10 most promising ETFs based on upward price movement and defined volatility levels for each rebalancing period. By emphasizing loss avoidance, the software engine pursues hyper-efficient portfolios that rapidly adapt to changing market conditions. The suite includes the BCM Decathlon Conservative, BCM Decathlon Moderate and BCM Decathlon Aggressive. The BCM Decathlon Series is offered by BFP Capital Management, a pioneer in defensively oriented, quantitative based ETF strategies.
Likewise, Jefferson National is the first and only variable annuity to offer the Power Income VIT from W.E. Donoghue & Co, a pioneer in providing tactical asset allocation solutions. The Power Income VIT is a diversified portfolio of income-producing high-yield fixed income securities using a tactical strategy which primarily trades between high yield bond funds and money markets. The strategy has been tested through many market cycles, including the technology compression of 2000- 2002 and the crisis of 2007 - 2009, with relatively minimal drawdown.
In addition, on June 15, 2012 Jefferson National will be the first and only variable annuity to offer the Hatteras Alpha Hedged Strategies Fund, a daily liquid, fully transparent fund of funds offering exposure to multiple hedge fund managers and multiple hedge fund strategies including Long/ Short Equity, Market Neutral, Relative Value – Long/Short Debt, Event Driven and Managed Futures strategies. The Fund seeks to achieve consistent returns with low correlation to traditional financial market indices while maintaining a high correlation to the Hedge Fund Research, Inc. (“HFRI”) Fund of Funds Composite Index. Hatteras Funds provides unique alternative investment solutions to financial advisors and their clients by providing access to the same sophisticated investment approach and superior portfolio management talent as the largest institutions.
And More Alternative Strategies from Market Leaders
From Invesco, a top global investment management firm with an operational network spanning over 20 countries, Jefferson National will add the Invesco VI Balanced-Risk Allocation II, which seeks to provide total return with a low to moderate correlation to traditional markets, employing a strategy that may invest in derivatives and other financially-linked instruments such as futures, swap agreements and total return swaps. Jefferson National will also add the Invesco VI Money Market I.
From Legg Mason, one of the largest asset management firms worldwide, serving institutional and individual investors on five continents, Jefferson National will add the Legg Mason Dynamic Multi-Strategy VIT II, which seeks the highest total return, while reducing volatility with multiple layers of risk management strategies. These risk management strategies include Dynamic Rebalancing, which systematically shifts allocation to and from cash in response to market conditions, and Event Risk Management, which seeks to reduce the impact of sudden and dramatic market drops on the Portfolio. Jefferson National will also add the Legg Mason ClearBridge Variable Small Cap Growth.
From Janus Capital Group, the 18th largest mutual fund complex in the US with $164.0 billion in assets under management, Jefferson National will add the Janus Aspen Protected – Growth Portfolio, which allows investors to participate in the stock market—and the growth it potentially offers—while seeking to cap downside losses at up to 20%. This Portfolio includes a hedged component to provide capital preservation, and may also invest in derivatives to achieve its objectives. The Janus Aspen Flexible Bond Portfolio is an all weather bond portfolio with a credit focus. Rounding out the suite are the Janus Aspen Global Technology Portfolio and the Janus Aspen Moderate Allocation Portfolio.
From Fidelity Investments, a leading provider of investment management with more than $1.6 trillion in assets under management, Jefferson National now offers the Fidelity VIP FundsManager® portfolios. This series of actively managed “fund of funds” uses in-depth research and extensive quantitative analyses, to satisfy five different target-risk portfolios, from conservative to aggressive, with equity allocation ranges from 20% to 85%. These include the Fidelity VIP FundsManager 20%, Fidelity VIP FundsManager 50%, Fidelity VIP FundsManager 60%, Fidelity VIP FundsManager 70% and Fidelity VIP FundsManager 85%.
From Wilshire Funds Management, a business unit of Wilshire Associates (“Wilshire®”), a leading provider of investment advisory services advising on more than $75 billion in assets as of 12/31/11, Jefferson National will add three ETF-based Target Date Funds which use dynamic allocations to align over time with investors’ shift from wealth accumulation to income. Designed for target retirement dates in 2015, 2025 or 2035, plus or minus two to three years, the funds include the Wilshire VIT 2015 ETF, the Wilshire VIT 2025 ETF and the Wilshire VIT 2035 ETF. The suite also includes the Wilshire VIT Socially Responsible fund, and five additional asset class funds, the Wilshire VIT Balanced, Wilshire VIT Equity, Wilshire VIT Income, Wilshire VIT International Equity and Wilshire VIT Small Cap Growth.
1Jefferson National’s Monument Advisor has a $20 monthly flat insurance fee. Additional fees ranging from $19.99-$49.99 will be assessed for investors wishing to purchase shares of ultra low-cost funds. See the prospectus for details. 2Morningstar data as of 12/31/11. 3Morningstar Data as of 5/04/12. 4Morningstar data as of 08/15/11 5The Tax-Efficient Frontier: Improving the Efficient Frontier with the Power of Tax Deferral, David Lau, Jefferson National, 2010. 61“RIAs and Fee-Based Advisors Alternative Investments and Tactical Management Survey” published by Jefferson National, September 2011. 7“The RIA Market Research Study,” conducted for Invesco by Cogent Research, September 2011.