U.S. residents may be putting less cash into variable annuities and variable life insurance policies, but they appear to be more adventurous with the cash that they are depositing in variable products.
Financial Research Corp., Boston, has published data supporting that view in a report on January variable product net flows.
Variable product stock, bond and money-market options took in $1 billion more cash than they lost in January, down from a net inflow of $1.6 billion in January 2005, according to FRC.
But FRC adds a very important warning: The flow totals exclude the hot new lifestyle funds and other “funds of funds.”
The FRC flow figures suggest that the lifestyle funds may be appealing to consumers who normally would have parked cash in the money-market options on variable product investment menus.