Although Allianz has affiliates involved in the ETF space, like PIMCO, it has never launched its own ETFs in the U.S. under the Allianz brand name. Today, Allianz Investment Management rolled out a pair of ETFs offering buffered exposure to the S&P 500 Price Index. The AllianzIM U.S. Large Cap Buffer10 Apr ETF (AZAA) and the AllianzIM U.S. Large Cap Buffer20 Apr ETF (AZBA) provide protection against the first 10% and 20% of losses in the index, respectively.
Both funds come with an expense ratio of 0.74% and list on the NYSE Arca. Their upside caps before expenses are set at 10.60% for AZAA and 5.41% for AZBA.
Risk Management With ETFs
Like existing defined or buffered outcome ETFs from Innovator and First Trust, the Allianz funds are actively managed and rely on Flexible Exchange (FLEX) options tied to the index they are looking to reflect to manage the portfolio’s performance. They also reset annually, like the existing products, at the end of their outcome period. AZAA and AZBA will reset on April 1, 2021.
“Risk management for us is in our DNA, from Allianz’s perspective,” said Corey Walther, president of Allianz Life Financial Services LLC. The firm manages some $145 billion in hedged assets, and the new products are designed to be a complement to its existing offering, according to a press release.
“For us, we really see this as leveraging our in-house hedging capabilities and our track record managing one of the largest blocs of business in the world in terms of bringing that risk management expertise and hedging capabilities that historically have been available to institutional investors to retail investors,” he added.
Walther notes that AllianzIM is entering the ETF market with the buffered outcome products for three primary reasons that are related to rising demand for risk-managed investment strategies. These include a decreasing appetite for risk among investors; challenging market dynamics related to rising volatility, low interest rates and record levels of cash on the sidelines; and the potential for providing more customized solutions that are likely to appeal to investors outside of Allianz’s usual annuity/insurance-related demographic.
The price point for the AllianzIM ETFs undercuts existing products, with Innovator charging an expense ratio of 0.79% and First Trust charging 0.85%.
Contact Heather Bell at [email protected]