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Clients and their advisors have learned that annuities are like blue cheese: Too stinky for some retirement savers who have spent too much time with the priests of the Temple of the Diversified Portfolio, but irresistible for retirement savers with the right palate.
Marketers have discovered that exchange-traded funds are like financial peanut butter: Irresistible for most.
Now, geopolitical uncertainty has made bonds and other fixed income assets more interesting to investors with enough of an inner market-timer to like the idea of buying assets when other investors are running off to hide in cellars in Spain.
The spot price of gold has increased to $5,1975.90 as of Jan. 27, up from $2,556.10 a year earlier, according to APMEX. Eric Fine, a portfolio manager at VanEck, is gently wondering whether, if the U.S. dollar loses reserve status, the price of gold could reach $39,000. The logical response of a contrarian investor is to look through lists of bond funds like a kid who is about to get a big gift certificate for a candy store buying spree.
If a client, or an in-house marketing executive, asks you to bring those three seemingly unrelated topics together, is that even possible?
The pairing problem: Annuities and ETFs do not go together like bread and butter, eggs and bacon, or red wine and steak.
Regulations keep variable annuity contract owners from investing directly in ETFs, for example.
As of Dec. 31, 2024, U.S. insurers had invested only $39 billion of their own $8.5 trillion in general account assets in ETFs. That's 0.4%.
The opening: But the National Association of Insurance Commissioners helps insurers use ETFs by having its Securities Valuation Office create lists of the bond ETFs that may be eligible to be reported as bonds, subject to an insurer's filing the ETF with the office for assignment of an NAIC designation.
Life and annuity issuers also use ETFs in connection with the client separate accounts inside variable life and variable annuity contracts.
The holdings: A look at the 2024 annual statements for companies like Lincoln Financial's Lincoln National Life and New York Life's New York Life Insurance and Annuity Corp. shows that the separate account investment lists include many entries for bond ETFs, including funds like BlackRock's iShares Core U.S. Aggregate Bond Fund ETF, BNY Mellon's BNY Mellon Core Bond ETF and State Street's SPDR Portfolio Aggregate Bond ETF.
Lincoln National, for example, reported having $13.6 million in separate accounts in the BNY Mellon Core Bond ETF. The fund was acquired Nov. 25, 2024.
New York Life Insurance and Annuity Corp. included an entry for $3.6 million in the SPDR Portfolio Aggregate Bond ETF, acquired Dec. 30, 2024.
Managers of the BNY Mellon Core Bond ETF, for example, say it "employs a passively managed, low-cost index approach with a fully transparent portfolio" and "is highly liquid so investors can buy or sell any time the stock market is open."
The ETF has $2.2 billion in net assets, a charge of 0.0% and a total expense ratio of 0%.
At the end of 2025, the holdings in the ETF had a weighted average maturity of 8.11 years.
At the end of 2025, the 1-year return was 7.2%. The ETF started up in April 2020, and the annualized five-year return was -0.4%.
The SPDR Portfolio Aggregate Bond ETF has $9.1 billion in assets and a 0.03% expense ratio.
The ETF is "a low-cost ETF that seeks to offer comprehensive exposure to U.S. dollar-denominated investment grade bonds, including government bonds, corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities and asset-backed securities," according to State Street.
The average maturity of the assets in that ETF is 8.04 years.
The 1-year return was 7.19%, the annualized five-year return was -1.68% and the annualized 10-year return was 1.95%.
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