Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

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jasonriggs2017
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Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

Post by jasonriggs2017 » Fri Jun 02, 2017 11:13 pm

I wish they would make an ETF or mutual fund of this index. Look at the chart and how it performed in 2008!


https://www.bcaelevate.com/shiller/


Anyone have any ideas on how to replicate since the product doesn't exist?

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LadyGeek
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Re: Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

Post by LadyGeek » Sat Jun 03, 2017 9:29 am

Welcome! You're missing a very big detail. See the note under the image:
Hypothetical Assumptions: Represents the hypothetical growth of $100 invested in the Shiller Barclays CAPE® US Index and S&P 500® Price Index from 12/31/02 to 12/31/15. It is not possible to invest directly in an index. Ask your insurance professional for more information on the historical performance of BCA Elevate, including the impact of the strategy rider charge and any optional rider charges. The Index was established on 2/3/14, and any performance shown before this date is back-tested by applying the index strategy to historical financial data. Back-tested performance is hypothetical and provided for informational purposes only. Past performance is not an indicator or guarantee of future results.
The operative word here is "hypothetical". What does that mean? They made a huge leap of faith that it's possible to have gotten those returns - but they don't know since it never really happened.

Look further - that index was started on 2/3/14. Why did they show performance back to 2002? Because this index makes their fund look good. The company, Balanced Choice Annuity Elevate (BCA Elevate) (now called Athene) is in the business of selling insurance products. The product they advertise, called a Fixed Indexed Annuity, is something to be avoided.

See our wiki: Equity-indexed annuity, note the big orange warning box at the top of the page.

Look at it this way: If we could have gotten 10% returns since 2002, don't you think we would have done so back then?

Why don't you try a time-proven method of investing, which is our approach (to invest in the entire market using low-cost diversified funds)?

You can get started here: Getting started

If you have any questions, ask them here.
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VaR
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Re: Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

Post by VaR » Sun Jun 04, 2017 5:59 pm

Also note that they've chosen to compare the performance of a total return index with the performance of a price index. I compared the return with that of the S&P 500 total return index over the period and it accounts for the difference.

So apparently after deciding that matching performance would not be compelling enough, they decided to stack the deck and ignore dividends for the "competing" index. Ha!

The fixed index annuity that the webpage is trying to sell has annual charges that seem to range between 0 and 2.75%. I suspect that it's really between 1.5% and 1.75%.

jasonriggs2017
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Re: Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

Post by jasonriggs2017 » Sun Aug 12, 2018 10:40 pm

The results are back tested based on historical data. So it’s hypothetical, but not an estimate or shot in the dark.

Secondly, even if the return including dividends is the same as sp 500 i would still choose the cape index because the drawdown in 2008 was so small. That alone would make it worth it for a retired investor.

Now as for the annuity fees and restrictions, that is an issue, which is why I said I wanted them to make an etf or mutual fund that tracks the index.

Doctor Rhythm
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Re: Shiller Barclays CAPE® US Sector Risk Controlled 10% USD Total Return Index

Post by Doctor Rhythm » Sun Aug 12, 2018 11:51 pm

jasonriggs2017 wrote:
Fri Jun 02, 2017 11:13 pm
Anyone have any ideas on how to replicate since the product doesn't exist?
Short answer is: No.

Longer answer is: No, and therefore I'm not sure this thread belongs on this board since it's non-actionable and hypothetical.
...the drawdown in 2008 was so small.
Even longer answer is: There was no drawdown in 2008 since there was no fund. As required, the referenced webpage says "Past performance is not an indicator or guarantee of future results." One either believes this statement or not. I do believe it, and doubly so for hypothetical performance for a fund that didn't even exist.

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FIREchief
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Re: magic beans

Post by FIREchief » Mon Aug 13, 2018 1:05 am

jasonriggs2017 wrote:
Sun Aug 12, 2018 10:40 pm
The results are back tested based on historical data. So it’s hypothetical, but not an estimate or shot in the dark.
You need to understand something here Jason. If you develop a predictive model based upon historical data, and then "backtest" it against the very same data, it is totally invalid from a statistical perspective. In other words, it's cheating. This is such a blatant example that I'm shocked it can still not beat the S&P 500 total return by a large margin. :annoyed
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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