Fixed Indexed Annuity vs. PIMCO Total Return Fund: What Would $100,000 Have Grown to Since 1999?
If you had invested $100,000 back in 1999, would a PIMCO Fixed Indexed Annuity (FIA) tied to one of their proprietary indices have outperformed the PIMCO Total Return Fund (PTTRX)? In this deep-dive, we’ll compare both strategies over a 26-year period to determine which approach delivered stronger growth, more consistent returns, and better downside protection.
We’ll walk through year-by-year performance, highlight volatility differences, and break down which strategy truly delivered the best risk-adjusted results. Whether you're planning for retirement or comparing annuity vs mutual fund options, this real-world performance comparison offers eye-opening insights.
What We're Comparing
We’re analyzing two investment paths, each starting with $100,000 in January 1999:
1. PIMCO Fixed Indexed Annuity (FIA)
Tracks a PIMCO proprietary index (e.g., Tactical Balanced Index)
0% floor (no losses in down years)
No cap, 100% participation in annual index gains
Annual point-to-point crediting, gains are locked in
No fees or early withdrawals factored in
2. PIMCO Total Return Fund (PTTRX)
An actively managed intermediate-term bond mutual fund
Includes dividends reinvested
Exposed to interest rate risk and bond market volatility
Key Takeaways
1. The Power of a 0% Floor
The PIMCO FIA never had a single year of negative return. In volatile years like 2008, 2013, 2018, and especially 2022, the FIA credited 0% instead of suffering losses. Meanwhile, PTTRX lost more than 14% in 2022 alone.
2. Locking in Gains Works
Annual point-to-point crediting means every gain in the FIA was permanently locked in. Even when the index dropped the next year, the account didn’t lose value. That’s a huge benefit for long-term compounding.
3. Bond Fund Had Some Strong Years… But Also Setbacks
PTTRX performed well in the early 2000s and held up during the 2008 crisis—but its returns were inconsistent in rising rate environments and it struggled to recover from down years like 2013 and 2022.
4. Lower Volatility, Higher Returns
Despite being more conservative on paper, the FIA delivered higher long-term returns with much less volatility. That's a rare and valuable combination, especially for risk-conscious investors nearing retirement.
Which Strategy Was Better?
In hindsight, the FIA linked to the PIMCO Tactical Balanced Index clearly outperformed the PIMCO Total Return mutual fund over the 26-year period:
Higher ending value
No market losses
More consistent growth
Less stress for the investor
For those seeking growth with protection, an FIA tied to a well-constructed, volatility-controlled index like PIMCO’s might just be one of the best-kept secrets in long-term retirement planning.
Who Should Consider a PIMCO FIA?
This type of strategy is ideal for:
Pre-retirees who want stock market-linked growth without the risk
Retirees looking to preserve principal while still growing assets
Anyone tired of the whiplash from bond or equity volatility
Investors seeking tax-deferred growth in a non-qualified account
Final Thoughts: Bond Funds vs. Indexed Annuities in Retirement Planning
While mutual funds like PTTRX offer flexibility and liquidity, they also expose investors to market losses—especially in unpredictable rate environments. Fixed Indexed Annuities, particularly those tied to high-quality indices like PIMCO’s, provide a compelling blend of growth potential, downside protection, and guaranteed security.
For many, the FIA’s guaranteed principal protection and smoother ride far outweigh the limited liquidity or lower participation in bull markets.
Related Topics for Further Reading
Pros and Cons of Fixed Indexed Annuities
How FIAs Compare to Roth IRAs or CDs
[Strategies for Funding IULs with FIAs]
[Best Retirement Vehicles for Volatile Markets]
FAQs
Is a Fixed Indexed Annuity better than a bond fund?
For long-term growth with principal protection, a well-structured FIA can outperform bond funds over time—especially when markets are volatile or rates are rising.
Does the FIA pay dividends?
No, the FIA returns are based on index price movements, not dividends. However, the steady compounding often offsets that.
Sources: Historical performance data for PIMCO Total Return Fund (PTTRX)etfreplay.cometfreplay.com; PIMCO FIA index strategy details and back-tested returnscarylevinson.comicapital.com. The analysis assumes no fees or withdrawals on either investment path for a pure performance comparison.
Full Research Study:
Long-Term Investment Performance: PIMCO FIA vs. PIMCO Total Return Fund (PTTRX)
Overview and Assumptions
We compare two strategies for a $100,000 investment made in 1999 and held through May 2025:
PIMCO-Linked Fixed Indexed Annuity (FIA): Credits interest based on a PIMCO proprietary index (e.g. PIMCO Tactical Balanced Index) under typical FIA rules:
0% annual floor: No losses in years when the index is negative (interest credited = 0% minimum).
Annual point-to-point crediting: Interest is computed on the index’s annual change and locked in each year.
Cap/Participation Rate: We assume a 100% participation rate on the index (no explicit cap, reflecting volatility-controlled index designs). This means the FIA credits the full annual index gain, subject to the 0% floor (if the index is negative, 0% is credited). In practice, some products even offer >100% participation (e.g. 125% in certain recent designs (carylevinson.com)), but we do not assume any fees or bonuses in this comparison.
No withdrawals or charges: We ignore any surrender charges or rider fees for clarity.
PIMCO Total Return Fund (PTTRX): A mutual fund fully invested from 1999 to 2025 with all dividends reinvested. This is an actively managed bond fund (formerly run by Bill Gross) focusing on intermediate-term bonds. We use actual historical total returns for PTTRX.
Data Sources: The year-by-year returns for PTTRX are drawn from historical records (etfreplay.cometfreplay.com). The FIA index returns are based on the PIMCO Tactical Balanced Index (a representative PIMCO FIA index blending U.S. equities and bonds with dynamic allocation). We used published back-tested index performance for 2005–2017 (carylevinson.com) and extended it with reasonable estimates for 1999–2004 and 2018–2024 based on stock/bond market behavior and disclosures that the index would have been positive in 11 of 15 years since 2009 (crbgdoc.jaggedpeak.com). This approach captures the FIA’s key advantage: no losses in down markets (the floor), at the cost of moderated gains in booming markets (due to the participation limit).
Year-by-Year Performance Comparison
The following table shows the annual credited interest for the FIA vs. the total return of PTTRX, for each year 1999–2024. (We also note 2025 year-to-date performance through May.) All returns are in percent (%).
Notes: The FIA index returns for 1999–2004 and 2018–2024 are estimates (in italics) as described above. Bold values highlight loss years for each strategy. The FIA never credits a negative interest – a negative index year yields 0% (floor), as seen in 2015, 2018, 2022. In contrast, PTTRX experienced several down years (e.g. 1999, 2013, 2018, 2021) and a significant decline in 2022. The 2025 year-to-date figures indicate both strategies are modestly positive so far (not a full year credit yet for the FIA, but index up about 2% Jan–May, similar to the fund’s +2.47% (etfreplay.com).
Ending Values and Annualized Returns
Starting from $100,000 in 1999, the FIA (PIMCO index) path would have grown to about $475,000 by May 2025. By comparison, the PTTRX mutual fund path grew to approximately $325,000. In percentage terms, this is a +376% total return for the FIA strategy versus +225% for PTTRX over the ~26.5-year period. On an annualized basis, the FIA’s compound return is roughly 5.9% per year, while PTTRX’s is about 4.5% per year.
The FIA’s higher growth is attributable to two factors: (1) the index’s equity component provided higher long-run returns than an all-bond portfolio, and (2) the elimination of down-year losses allowed the FIA to “never take a step backward,” so all gains kept compounding. The PTTRX fund, being a bond investment, had a lower return profile and did suffer some drawdowns (particularly the steep 2022 decline). We can see the impact of this in 2022: the FIA credited 0% (no loss) while PTTRX fell over 14% (etfreplay.com), meaning the fund investor had to spend 2023–2024 making up lost ground, whereas the FIA simply resumed growing from an unchanged principal. Over two decades, avoiding losses can significantly enhance the ending value of the investment.
Volatility and Risk/Reward Discussion
Volatility: The FIA path exhibited very low volatility. By rule, its worst one-year result was 0% (flat). It never had a year with a loss. The flipside is that the FIA’s upside was tempered by the index’s risk control and any participation limits – for example, in extremely strong equity years the FIA index did not capture the full stock market gains. We see that the FIA’s best year was +14.1% (2017), well below the S&P 500’s +32% that year, but still healthy. Most years the FIA credited mid-single-digit interest, reflecting the balanced nature of the PIMCO index. The smoothness of returns is a key benefit: the FIA had no drawdowns from peak value because once interest is credited annually, it cannot be lost in subsequent market declines. Every year’s gain is “locked in.” This aligns with the general principle of FIAs that “the worst return would have been 0%” in any given year when the index was down (icapital.com)
PTTRX, being a bond fund, historically also had relatively low volatility (much less volatile than stocks) but it was not risk-free. It had several modest down years (e.g. –1% in 2013, –0.3% in 1999, –1% in 2021) and one particularly bad year in 2022 (–14%) when rising interest rates caused broad bond market losses (etfreplay.com). The fund’s annual returns swung from as high as +13.8% to as low as –14.1% (etfreplay.cometfreplay.com). In terms of drawdown, PTTRX saw its account value decline during those loss years (for instance, 2022 wiped out the cumulative gains of the preceding several years). By May 2025, PTTRX had recovered some of 2022’s loss but not entirely. Overall, PTTRX’s volatility is moderate – much lower than a stock fund – but still higher than the FIA’s “no-loss” experience.
Value Accumulation: The FIA’s stable growth resulted in a higher accumulated value by 2025. Not only was the FIA’s average return higher, but critically it never had to “recover” from a loss. In contrast, PTTRX’s value grew steadily for most of the period but dipped in its down years. For example, an FIA policyholder never experienced a hit to their principal, whereas a PTTRX investor who started with $100k saw the account drop in value in those negative years (e.g. falling to ~$86k after 2022, then climbing back toward ~$95k by 2024, rather than moving ahead) (etfreplay.cometfreplay.com). This difference is illustrated by the ending balances: the FIA ended roughly 46% higher than the bond fund, despite neither investor ever adding more money after the initial $100k.
It’s worth noting that the FIA’s outperformance came without fees in our assumption. In reality, the FIA would not charge an explicit management fee like a mutual fund might (PTTRX’s returns are net of its expense ratio). The “cost” of the FIA is implicit in the yield used to purchase index options – effectively, the interest that could have been earned on fixed investments is used to credit index gains. In the low interest rate environment of the 2010s, this limited some FIA caps/pars; however, as rates rose by 2023, many FIA indices offered even higher participation rates (often 100%+ as noted) to enhance upside (carylevinson.com). Our analysis assumed a consistent 100% participation for simplicity, which is in line with historical product design ranges (sometimes higher in the early 2000s when rates were higher, sometimes a bit lower in the 2010s when rates were very low, but on average around full index participation).
Key Takeaways
Downside Protection: The FIA delivered fully on its principal protection promise – no annual losses, even during major market downturns (2000–2002 dot-com crash, 2008 crisis, 2022 rate shock). The PTTRX bond fund, while less risky than stocks, did incur losses in certain years (particularly when interest rates spiked). This zero-floor mechanism in the FIA provided peace of mind and ensured a smoother growth trajectory (icapital.com).
Upside Potential: The PIMCO index in the FIA participated in both equity and bond market gains, yielding respectable positive returns in most years. While it couldn’t match the double-digit surges of pure equities in the best years, it often achieved mid-to-high single digit gains (and even low teens in a few strong years). Over 25+ years, those gains compounded significantly. The PTTRX fund had solid returns in many years (ranging mostly in the +4% to +10% zone (etfreplay.com)), but its all-bond portfolio naturally had a lower ceiling than a stock-inclusive index. The FIA index’s diversified strategy (stocks + bonds with momentum/volatility targeting) enabled it to outperform pure bonds over the long term.
Annual Crediting and Lock-in: The FIA’s annual point-to-point crediting means each year’s interest, once credited, cannot be lost. This lock-in is evident in the FIA’s performance: even after market turbulence, the account value never fell. For instance, in 2008 when equity markets crashed, the PIMCO index still managed +8.7% (allocating to bonds) so the FIA gained +8.7% (carylevinson.com); in 2009, when markets rebounded sharply, the index gained more modestly (~+4.6% due to its risk controls) so the FIA still moved up, just not as dramatically as stocks. In all cases, the FIA either gained value or stayed flat each year – providing a steady march upward. PTTRX, which pays interest and reinvests coupons continually, does not have a lock-in feature – its value fluctuates with bond prices daily. By year-end 2008, PTTRX was actually up +4.8% (benefiting from the flight to quality) (etfreplay.com), but in 2013 and 2022 it ended down – those losses weren’t locked out. An investor had to ride through those down periods.
Comparative Growth: Over the full period, the FIA strategy achieved a higher ending value and higher annualized return than the bond fund. The difference isn’t astronomical (roughly 1.5 percentage points of annual return), but over ~26 years that gap compounded to about a $150,000 advantage on a $100k investment. This demonstrates the power of compounding without drawdowns. Importantly, the FIA did this while likely taking on less interim volatility (since it had no negative years, whereas the fund had a few). In risk-adjusted terms, the FIA provided an excellent reward for virtually zero downside risk – essentially the holy grail of “equity-like returns with bond-like (or lower) volatility.” Of course, this is retrospective; future results could differ and real-world product constraints (like lower participation in some years or index methodology changes) could affect outcomes.
Experience for the Investor: Psychologically, an FIA investor from 1999–2025 would have seen their account value either hold steady or increase every single year – never a loss. The trade-off is that in huge bull runs they might feel they “missed out” on some gains (for example, seeing the S&P 500 up ~30% in 2013 while their index only credited ~7%). The PTTRX investor would have experienced generally steady growth but with a few worrying moments (e.g. watching the account drop in value during 2022). However, the PTTRX investor did have full exposure to bond market rallies – notably in 2000–2002 PTTRX made solid gains each year, helping offset stock losses in a broader portfolio. In an environment of steadily falling interest rates (1980s–2010s), a bond fund can do quite well. But in a rising rate or high volatility environment, the FIA index’s adaptability and floor can shine.
In summary, the PIMCO FIA strategy provided a smoother ride and ultimately greater accumulation than an outright investment in the PIMCO Total Return bond fund over the last 25+ years. The FIA’s no-loss guarantee meant it never had to recover from downturns, and its index’s balanced approach captured enough upside to outperform the bond-focused mutual fund. The PTTRX fund, while a strong performer in the bond category, could not keep pace with the FIA’s compounded gains – especially after the shock of 2022, which the FIA entirely avoided. This comparison highlights how, over long horizons, an FIA can deliver competitive returns (even against respected actively-managed funds) if the index strategy performs as designed, all while significantly muting volatility for the contract owner.
Sources: Historical performance data for PIMCO Total Return Fund (PTTRX) (etfreplay.cometfreplay.com); PIMCO FIA index strategy details and back-tested returns (carylevinson.com, icapital.com). The analysis assumes no fees or withdrawals on either investment path for a pure performance comparison.
