Equity index annuities (EIA) are complex and hard to explain, but investors may respond to one thing: these products have outperformed between 63% and 75% of mutual funds, according to a report from the
While the report notes the strong relative performance of EIAs, it also notes, "burying your money in the backyard would have bested 75% of stock mutual fund returns." EIAs offer a portion of the return of an index such as the S&P 500, but they also do not return less than 0% in a given year. This downside performance protection has boosted the annuities relative performance during the bear market.
Even though EIAs only return a portion of their respective indexes, and generally have a performance cap that limits returns in a given year, "they still would have outperformed 89.6% of equity mutual funds."