Roughly 4 out of 5 premium dollars placed into index annuity indices today have interest crediting linked to the S&P 500 index, which was the original index. The first additional indices were offered by Jackson National Life and included the S&P 400, Nasdaq 100, and an international index.
In 1999, American Equity became the first carrier to offer the Dow Jones 30 (DJIA). Today, a majority of carriers offer different index choices that range from the Russell 2000 to the Hang Seng. Although use of the S&P 500 has declined a bit as other index choices have grown, it is still, by far, the predominant index, which is why the index returns I usually report are based solely on S&P 500-linked methodologies. However, use of other indices continues to grow.
If you compare the 12-month returns of various indices over the previous 10 years — with negative returns reported as zero gains, reflecting the annual reset approach of index annuity interest crediting — the mean annual returns were: Dow-7.6 percent; S&P 500-8.1 percent; Nikkei 225-9.2 percent; Nasdaq-11.2 percent; Russell 2000-12.3 percent; and Hang Seng-15 percent.
Based on these numbers, and similar results going back roughly 30 years, it does make sense to use multiple indexes if the index participation is roughly equal or the indexes are not well correlated. The Russell, Nasdaq, and Hang Seng returns averaged about 50 percent higher than the S&P 500. Adding these indices might provide a boost to index annuity interest.