Fidelity Investments has rolled out a target volatility strategy, the Fidelity VIP Target Volatility Portfolio. Offered exclusively through variable annuity and variable life insurance products, the portfolio seeks to manage total return volatility within a target range.
Nineteen-year Fidelity veteran Xuehai En is the lead portfolio manager for the fund, while Bob Vick, a 24-year veteran of Fidelity, is co-manager.
Fidelity also said that Ohio National Financial Services and Jefferson National are the first insurance companies to package the portfolio in their annuity offerings, ONcore Individual & Group Variable Annuities (in New York, NScore variable annuities issued by National Security Life and Annuity Company) and Jefferson Nationals flat-fee variable annuity, Monument Advisory, respectively.
The VIP Target Volatility Portfolio primarily invests in U.S. equities, foreign developed market equities, U.S. investment grade bonds, and cash through a combination of underlying Fidelity mutual funds as well as ETFs and index futures. The investment team has flexibility to invest in other asset classes, such as high yield debt and emerging market equities and debt.
The managers seek a target portfolio volatility -- defined as the measurement of the magnitude of up and down fluctuations of the funds return over a specified time period of 10% over rolling one-year periods. The investment team develops volatility forecasts to adjust the portfolios asset allocation in response to periods of forecasted high or low market volatility.
The VIP Target Volatility Portfolio uses a blended benchmark as an asset allocation guide made up of the Dow Jones U.S. Stock Market Index (42%), MSCI EAFE Index (18%), Barclays U.S. Aggregate Bond Index (35%), and Barclays U.S. 3 Month Treasury Bellwether Index (5%).
En joined Fidelity in 1994 and currently manages five VIP FundsManager Portfolios with $9.3 billion in total assets as of March 31, 2013. Vick joined Fidelity in 1989 and currently manages the Strategic Advisers U.S. Opportunity Fund and Strategic Advisers U.S. Opportunity II Fundwith $4.8 billion in total assets as of March 31.