Volatility-Controlled Indexes — The FIA Indexes That Quietly Disappeared

By Editorial Team

Published April 1, 2026 · Updated May 5, 2026

From 2015 to 2021, carriers sold millions of FIA contracts tied to proprietary volatility-controlled indexes with backtested returns that looked compelling on paper. Then 2022 arrived.

If you purchased a fixed indexed annuity between 2015 and 2021 and the agent showed you a crediting strategy tied to something with a name like “Barclays Atlas 5,” “BNP Paribas Multi Asset Diversified 5,” “PIMCO Global Optima,” or “Deutsche Bank Balanced Value,” you were almost certainly looking at a volatility-controlled index — a proprietary construct engineered specifically for the FIA market. Many of those indexes no longer exist in active use. Some were quietly removed from new product offerings. Others delivered effectively zero credits for years on end before carriers discontinued them. Understanding what happened is important for anyone who owns one of these contracts.

What a Volatility-Controlled Index Actually Is

A volatility-controlled index — sometimes called a risk-control index or engineered index — is not a market index in the conventional sense. It does not simply track a basket of stocks or bonds. Instead, it is an algorithm that dynamically allocates between a risky asset (often equities or a multi-asset blend) and a cash or Treasury position, adjusting that allocation daily or intraday to maintain a target level of volatility — typically 5%, 7%, or 10% annualized.

When equity volatility spikes, the index automatically reduces its equity exposure, sometimes to near zero. When volatility subsides, it adds equity back. The stated rationale is smoother, more predictable returns. The commercial rationale — rarely explained to buyers — is that low-volatility indexes are cheaper for carriers to hedge. Because the index’s behavior is constrained, the options that fund potential credits cost less, allowing carriers to offer higher participation rates or lower spreads than they could on a raw S&P 500 strategy.

Most of these indexes are also “excess return” constructs — they subtract a deduction rate (often the overnight rate or a fixed percentage) from gross index gains before crediting anything to the policyholder. In a low-rate environment, this deduction was manageable. In a rising-rate environment, it became a meaningful drag.

2020–2022: When the Design Failed

The volatility-controlled index era ran into two simultaneous problems in the 2020–2022 window that exposed a fundamental flaw in how these products were sold.

The first problem was 2020 itself. When COVID-19 triggered one of the fastest equity market drawdowns in history in February and March of 2020, volatility spiked dramatically. VIX readings above 80 forced volatility-controlled indexes to reduce their equity allocations to near zero — exactly as designed. But by the time volatility subsided and the algorithm began reintroducing equity exposure, markets had already recovered most of their losses. Policyholders who were nominally linked to equity markets captured essentially nothing from the 2020 recovery.

The second problem was 2022. The Federal Reserve’s aggressive rate hike cycle sent bond prices down sharply at the same time equity volatility remained elevated. Many multi-asset volatility-controlled indexes held both equities and bonds as their “risky” component — meaning they had nowhere to hide. The algorithms shifted to cash and earned near-zero gross returns. The deduction rate, now anchored to rising overnight rates, subtracted additional percentage points. Net credits for full calendar year 2022 on many of these strategies were zero or effectively zero.

Specific Indexes That Faded or Were Discontinued

The following represents a partial picture — carriers do not publicize index discontinuations, and full transparency is difficult to obtain from public sources alone:

• Barclays Atlas 5 / Barclays Trailblazer Sectors 5: Widely used across carriers including SILAC and others in the mid-2010s. Targeted 5% volatility. Delivered multiple zero-credit years between 2019 and 2022. Carriers began removing these from new product offerings after policyholder complaints about repeated zero-credit terms. Many existing contracts remain tied to these indexes.
• BNP Paribas Multi Asset Diversified 5 (BMAD5): Used by several carriers as a “diversified” crediting option. The multi-asset mandate — equities, bonds, commodities — meant 2022’s correlation collapse hit it particularly hard. Near-zero credits for the full contract year in 2022 were common.
• Deutsche Bank and SocGen engineered indexes: Several proprietary constructs built in collaboration with Deutsche Bank and Société Générale were offered through the 2015–2020 window. After both the 2020 volatility event and 2022’s drawdown, many were quietly retired or replaced with newer constructs with different mechanics.
• SG AI Navigator and Smart Passage SG: AI-driven and global allocation models that appeared in newer contracts. Both showed negative index returns of -8.2% and -13.8% respectively in 2025 — before product floors were applied — reflecting continued struggles with uneven volatility and currency exposure.
• WisdomTree Siegel Strategic Value: A newer entry that showed -4.7% index performance in 2025. While the FIA floor prevents a negative credit, repeated zero-credit years on a product sold on its backtested performance is a different outcome than what illustrations suggested.

The Backtesting Problem

Every one of these indexes was sold with backtested performance showing returns that looked compelling relative to a fixed account or even simple S&P 500 capped strategies. The backtests were not fraudulent — they accurately reflected what the algorithm would have done with historical data. But they carried a selection bias that was almost never disclosed: the indexes were designed after the fact using historical data, then backtested on that same data. An algorithm optimized on 2000–2014 data will look impressive over 2000–2014. It says nothing about how it will perform from 2015 forward in live market conditions.

NAFA (the National Association for Fixed Annuities) publishes monthly volatility-controlled index performance data. A review of that data going back to 2020 shows that the majority of 5% and 7% volatility target indexes have delivered materially lower live returns than their backtested histories suggested was plausible.

What Policyholders with These Contracts Should Do

If you own an FIA tied to a proprietary volatility-controlled index and have received zero or near-zero credits for multiple consecutive years, you have a few options worth understanding:

1. Review your contract for index substitution rights. Some contracts allow policyholders to reallocate among available crediting strategies at each anniversary. If a simple fixed account or S&P 500 capped strategy is available, shifting may make sense.
2. Calculate your actual IRR to date. Use the income/IRR calculator on this site with the premium you paid and the current account value to understand what annualized return you have actually earned. If it is materially below your surrender charge penalty, that informs whether any action is worth taking.
3. Do not make surrender decisions based on emotion. Surrendering during the surrender charge period to move to a “better” product typically involves transferring costs — surrender charges, MVA, and potential tax consequences — that can easily exceed the benefit of improved future performance.

The Industry’s Response

Carriers did not disappear these indexes with any public announcement. The more common pattern was to discontinue offering them to new buyers while existing policyholders remained tied to them. New product offerings shifted toward simpler strategies — S&P 500 point-to-point with annual caps, performance triggers, and participation rates on conventional indexes — partly because these are easier for consumers to understand, and partly because Athene’s decision to eliminate several engineered indexes from its Protector product in early 2025 in favor of guaranteed S&P 500 strategies signaled where the market was moving.

The lesson is not that volatility-controlled indexes are always bad products. In theory, a well-constructed volatility management mechanism provides genuine value over a full market cycle. The lesson is that backtested illustrations sold as forward-looking performance projections are not the same as actual returns — and that the FIA market has historically blurred that distinction.