What strategy could an insurance company implement to mitigate the risk of offering 100% guarantees on an equity fund?

To mitigate the risk associated with offering 100% guarantees on an equity fund, setting a maturity date of 15 years instead of 10 years is a strategically sound approach. By extending the maturity period, the insurance company can provide a longer investment horizon for the equity fund. This extended timeframe allows for greater potential recovery from market fluctuations. Equity markets can be volatile in the short term, but historically, they tend to provide growth over longer periods.

A longer investment horizon helps manage risk more effectively, as it allows the company's portfolio to remain invested during market downturns while having the potential to benefit from market recoveries. Consequently, this strategy can reduce the likelihood of needing to pay out guarantees during unfavorable market conditions, thus helping the insurance company manage its financial exposure and stabilize its outcomes.

Other approaches mentioned might not address the fundamental risk associated with guarantees as effectively as extending the maturity period. For instance, making a fund no-load does not directly impact the risk of guaranteeing returns, increasing resets may benefit investors but could complicate the company's risk management further, and lowering the Management Expense Ratio (MER) might enhance attractiveness but won't alleviate the risks involved in guaranteeing returns on investments.