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Managed volatility funds at $129 billion in September

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Monies in invested in managed volatility funds totaled $129 billion as of September 2012, new research shows.

Strategic Insight, New York, released this finding in a summary of results from a new report, “Managed Volatility: The Anatomy of an Investing Trend.”  The study analyzes the use of managed volatility assets, including both mutual funds and variable annuities, among asset managers, insurance companies and distributors.

Managed volatility funds readjust investments for periods of high volatility or market declines. Because the funds can help insurers better manage the risk of living and death benefits, they have proliferated within both variable annuity funds and retail mutual funds, according to Tamiko Toland, managing director of Retirement Income Solutions at Strategic Insight.

The $21 billion total recorded in September represents more than a 21-fold increase from the $967 million posted in the quarter of 2006, the survey report.

Strategic Insight’s analysis also reveals that “converted portfolios”—non-managed volatility assets that investors reallocated to managed volatility assets—accounted for $61 billion or 47% of the September total. Most of the converted assets went into variable annuities.

The new research identifies 175 managed volatility funds provided by 32 investment advisors.