Morgan Stanley Expanded Horizons IndexSM
Built to provide steady growth through a variety of market environments
An opportunity for stable growth
Morgan Stanley utilizes some of the same proprietary quantitative finance insights used to manage portfolios for their retail and institutional clients in the design of the Morgan Stanley Expanded Horizons IndexSM (the “Index”). Designed to seek more consistent returns in both good and bad market environments, the Index is founded upon three core principles:
Morgan Stanley, one of the world’s leading investment management firms, designed the Index using their latest global asset management techniques to help provide more consistent returns with potentially less risk.
Benefit from broad diversification
The Morgan Stanley Expanded Horizons IndexSM offers broad representation across equities and bonds. The Index’s diverse set of asset classes have the potential to reduce risk and provide growth opportunities through changing markets.
Multiple growth opportunities
The Index may not always include exposure to each region. The Index has exposure to asset classes through ETFs or index futures that track the positive or negative performance of each respective asset class. See bottom of this page for index constituent definitions and the associated risks.
Morgan Stanley’s proprietary optimization process
The Index applies Morgan Stanley’s proprietary monthly forecasting and daily optimization processes to help account for market movements and the valuation of asset classes. Momentum and valuation signals are also used in the process to help generate more accurate performance forecasts and reduce exposure to high-priced strategies.
Dynamic Optimization Components
Monthly re-optimization is designed to account for revised asset class forecasts and evolving markets. The daily dynamic rebalancing aims to maintain a 5% annualized volatility target.
There is no guarantee that the optimization strategy will result in positive performance or prevent negative returns.
Smoothing volatility helps create more stable returns
The Morgan Stanley Expanded Horizons IndexSM would have provided steady growth through a variety of market environments due in part to a monthly allocation process and daily rebalancing that helps adapt to market changes and mitigate potential risks. The graph below shows how the Index would have performed had it been available in past markets.
Morgan Stanley Expanded Horizons IndexSM
Past performance is not indicative of future results. The Morgan Stanley Expanded Horizons IndexSM was launched on 12/5/19. Returns for the Morgan Stanley Expanded Horizons IndexSM before these dates represent hypothetical data determined by retroactive application of a back-tested model, itself designed with the benefit of hindsight. Hypothetical data is provided for illustrative purposes only. The Index is an Excess Return index, which deducts a short-term interest rate. It also includes an embedded cost. The above hypothetical chart is intended only to show the hypothetical growth of the Morgan Stanley Expanded Horizons IndexSM. Actual results for a specific insurance contract would depend partly on the crediting strategy chosen and the spread and participation rate for the time period(s) shown. You cannot invest directly in an index.
3 Diversification, forecasting and volatility control measures do not guarantee positive performance or prevent negative returns.
This material was prepared to support the marketing of X5 Advantage Annuity. This information is general in nature, may be subject to change and does not constitute legal, tax or accounting advice from any company, its employees, financial professionals or other representatives. Applicable laws and regulations are complex and subject to change. For advice concerning your situation, consult your attorney, financial professional, tax advisor, or accountant.
Tax-qualified plans such as IRAs, 401(k)s or 403(b) plans are tax deferred regardless of whether or not they are funded with an annuity. If you use X5 Advantage to fund a tax-qualified plan, you should know that an annuity does not provide any additional tax-deferred treatment of interest beyond the treatment by the tax-qualified plan itself. You should only use an index annuity in a tax qualified plan if you want to benefit from features other than tax deferral. If you intend to take Required Minimum Distributions (RMDs), please consult with a tax advisor concerning your particular circumstances. X5 Advantage may not be appropriate if you plan to make ongoing contributions.
Index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the claims-paying ability of the issuing insurance company. They provide the potential for interest to be credited based in part on the performance of the specified index, without the risk of loss of premium due to market downturns or fluctuations. Index annuities may not be suitable or appropriate for all individuals.
Stocks and bonds are subject to risks, including the possible loss of principal. International stocks that provide exposure to foreign markets involve special risks, such as currency fluctuations, differing financial reporting and regulatory standards, and economic and political instability. These risks are highlighted when stocks are from emerging markets. Stocks of small cap companies are generally more volatile and not as readily marketable as those of larger companies. Government bonds and Treasury bills are subject to interest rate risk, but they are backed by the full faith and credit of the U.S. government if held to maturity. The repayment of principal and interest of a corporate bond are guaranteed by the issuing company, and subject to default and credit risks. It is not possible to invest directly in an index.
Index and Constituent Definitions: The S&P MidCap 400 Index is an unmanaged group of 400 domestic stocks chosen for their market size, liquidity, and industry group representation. The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The MSCI Europe, Australasia, Far East (EAFE) Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. MSCI Emerging Markets Index measures the performance of emerging equity markets, including China, South Korea, Taiwan, India, and Brazil. The iShares U.S. Real Estate ETF seeks to track the investment results of an index composed of U.S. equities in the real estate sector. 2-Year, 5-Year, and 10-Year U.S. Treasuries are government debt instruments issued by the United States Government. Investment Grade Bonds are represented by an ETF basked consisting of 30% iShares Core U.S. Aggregate Bond ETF, which seeks to track the investment results of an index composed of the total U.S. investment grade bond market, 50% iShares iBoxx $ Investment Grade Corporate Bond ETF, which seeks to track the investment results of an index composed of U.S. dollar-denominated, investment grade corporate bonds, and 20% Vanguard Total Bond Market ETF, which is designed to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. This index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than 1 year. High Yield Bonds are represented by an ETF basket consisting of 70% iShares iBoxx $ High Yield Corporate Bond ETF, which seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds, and 30% SPDR Barclays High Yield Bond ETF, which seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg Barclays High Yield Very Liquid Index which is designed to measure the performance of publicly issued U.S. dollar denominated high yield corporate bonds with above-average liquidity. The iShares TIPS Bond ETF seeks to track the investment results of an index composed of inflation-protected U.S. Treasury Bonds. The U.S. Federal Reserve Fed Funds Rate is the interest rate that banks with excess reserves at a Federal Reserve district Bank charge other banks that need overnight loans.
Any reference to Morgan Stanley in this brochure refers to the firm’s asset management arm, Morgan Stanley Investment Management.
The Morgan Stanley Expanded Horizons IndexSM is a service mark of Morgan Stanley Investment Management Inc. or its affiliates (collectively “MSIM”) and has been licensed for use for certain purposes by American General Life Insurance Company and affiliates (“licensee”). The intellectual and other property rights to the methodology and formula of the index are owned by or licensed to MSIM. This annuity (the “product”) is not sponsored, endorsed, sold or promoted by MSIM or any of its third party suppliers including data licensors (“MSIM and its suppliers”). MSIM and its suppliers make no representations or warranties regarding the advisability of adopting a strategy, obtaining investment exposure to the Index through any means, investing in financial products generally or purchasing the product particularly or the ability of the index to track general market performance. MSIM is not acting as investment adviser to you in connection with, or through, the index or the product, and MSIM undertakes no, and expressly disclaims any, fiduciary duty to you in connection with the index or the product. Past performance of an index is not an indicator of or a guarantee of future results. Use and distribution of the index, index data and MSIM’s service marks are prohibited without MSIM’s express written permission.
Indices are not a permanent part of the contract and may be removed due to circumstances beyond the control of American General Life Insurance Company. Such circumstances include, but are not limited to, the discontinuation of an index, a change in the composition or calculation of an index, the inability to license the use of an index and the inability to hedge risks associated with the index. Special rules govern how assets in an index account with a discontinued index may be reallocated. These rules may differ by state. Please see the Owner Acknowledgment and Disclosure Statement for more information.
Genesis Development Group, Inc. has patents and patents pending that may cover elements of the products discussed in this document. This document does not convey any license or other rights in these patents.
Annuities are issued by American General Life Insurance Company (AGL), 2727-A Allen Parkway, Houston, Texas 77019. X5 Advantage Single Premium Deferred Fixed Index Annuity, Contract Number AG-808 (07/19) (AG-808-ID (07/19) for Idaho residents). AGL is a member company of American International Group, Inc. (AIG). The underwriting risks, financial and contractual obligations and support functions associated with the annuities issued by AGL are its responsibility. Guarantees are backed by the claims-paying ability of AGL. AGL does not issue products in the state of New York. Annuities and riders may vary by state and are not available in all states.
Annexus is an independent product distribution firm that works with Independent Distribution Companies to distribute retirement products. Annexus is not affiliated with AIG or AGL.