Fidelity Investments is offering a new twist on funds of funds for the variable annuity market. The move comes as funds of funds have grown increasingly popular in the VA world, a trend that mirrors the appeal of lifecyle and similar funds in retail. According to Strategic Insight, the top 10 funds of funds in the VA market have gone from $485 million in 2000 to almost $20 billion in assets in 2005. William Loehning, executive v.p. of Fidelity Investments Institutional Services, said the new FundsManager series will have a static allocation, giving advisors a bigger role in creating a portfolio for an investor.

Fidelity now offers its Freedom Funds, which are designed around an investor's retirement date and become more conservative over time, in the variable market. With the new series, an advisor chooses a fund by the amount of equity exposure, such as VIP FundsManager 70% Portfolio, which has a 70% allocation to equities. The series includes four portfolios, with varying degrees of exposure to equities. Loehning said the series has access to more than 200 retail funds and will be good choices for investors rolling out of 401(k) plans.