(Bloomberg) – Transamerica, the U.S. insurer owned by Aegon NV, is turning to BlackRock Inc. to offer variable annuity portfolios comprising exchange-traded funds that weigh factors other than a stock’s market capitalization.
The so-called smart-beta ETFs from BlackRock, the world’s largest money manager, can account for value, quality, momentum and size when picking securities, the annuity provider said Wednesday in a statement. The three new investment options will be sub-advised by BlackRock, while Transamerica is the investment manager.
Insurers have been providing more complex investment options to win both institutional and retail clients, and to be able to charge higher fees. The offerings help counter a trend toward passive index strategies in which companies compete by offering the lowest fees, squeezing profit margins. Prudential Financial Inc., the second-largest U.S. life insurer, introduced a product last year to allow retail investors to bet on strategies favored by hedge funds.
“These are new solutions that present the opportunity to have an interest in equity portfolios possessing a high degree of investment rationale,” Tom Wald, Transamerica Asset Management’s chief investment officer, said in the statement. “We are excited to be offering these variable annuity investment options.”