DOCSLIB.ORG

Stable Value Fund As of March 31, 2021

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Stable Value Fund As of March 31, 2021 Stable Value Fund As of March 31, 2021 ACTIVE / PASSIVE: WHAT IS IT1: Style Characteristics of Fund Actively Managed Short Inter- Long This investment option focuses on a diversified portfolio of U.S bonds and other Duration mediate Duration ASSET CLASS: debt securities. The fund is managed by Galliard. This is not a mutual fund. High Quality Stable Value Medium BENCHMARK: FTSE 3 Month T-Bill Low Quality PERFORMANCE HISTORY (%) GOAL: Qtr YTD 1 Year 3 Years 5 Years 7 Years 10 Years Seeks stability of principal and Stable Value Fund2 0.48 0.48 2.22 2.41 2.27 2.16 2.23 consistency of returns with Benchmark 0.02 0.02 0.21 1.45 1.15 0.84 0.60 minimal volatility. Unit price, yield, and return will vary daily. 2020 2019 2018 2017 2016 2015 2014 Stable Value Fund2 2.37 2.61 2.31 2.04 2.04 1.93 1.72 WHAT IT INVESTS IN: Benchmark 0.58 2.25 1.86 0.84 0.27 0.03 0.03 Primarily invests in a broadly diversified portfolio of fixed SINCE INCEPTION RISK/RETURN GROWTH OF A $1,000 INVESTMENT1 income securities including financial instruments issued by 2,000 highly rated companies. These 3% 1,800 include security backed Fund 1,600 contracts which are comprised 1,400 of two components: an 1,200 underlying fixed income 2% portfolio that invests primarily in 1,000 U.S. domestic fixed income 800 securities (bonds), and "wrap 1% Benchmark 600 contracts" issued by a high Return (Annualized PercentReturn) 400 quality financial institution to 200 help provide stability of 0% 0 principal and a smooth credited 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% rate of interest. The fund may Risk (Annualized Standard Deviation) also hold cash or cash equivalents, bonds, and shares Fund Benchmark or units in stable value and/or SECTOR ALLOCATION CREDIT QUALITY bond collective trust funds. Fund U.S. Treasury 19.7% CURRENT EXPENSE RATIO3: U.S. Agency 0.0% 10% AAA 0.14%. This means you'll pay $1.40 Other U.S. Government 6.9% 14% AA per year for each $1,000 Corporates 26.0% A invested in the Fund. 7% Fees are charged directly to the BBB Taxable Muni/Not for Profit 6.7% 69% fund. Agency MBS 17.9% <BBB RISKS: Non-Agency MBS 1.0% The Stable Value Fund is subject to credit/default risk as CMBS 5.1% well as interest rate risk and 13.4% active management risk. Asset Backed Please see footnote number 4 Fund Cash & Equivalents 3.5% in the disclosures for more information. *Allocations in the chart may not add up to the total shown above due to rounding. CHARACTERISTICS RISK PROFILE (SINCE INCEPTION) Fund FUND Duration (Years) 2.86 Beta 0.50 Yield to Maturity 0.7% Risk (Standard Deviation) 0.29% Market/Book Value 104.8% Excess Return 1.84% Blended Yield 2.2% Tracking Error 0.29 Number of Contract Issuers 4 Average Annual Turnover 47.67% Definitions & disclosures on following page Stable Value Fund As of March 31, 2021 Definitions Duration measures a bond’s interest rate risk and is expressed in years. The longer the duration of a bond, the more sensitive the bond is to changes in interest rates. More specifically, duration is the approximate percentage change expected in a bond’s price for a 100 basis point change in yield, all else equal. Although other factors impact bond prices, prices tend to fall when interest rates increase, all else equal. Yield to Maturity is the expected rate of return of a bond if it is held to its maturity date; calculated by taking into account the current market price, stated redemption value, coupon payments and time to maturity and assuming all coupons are reinvested at the same rate. It is equivalent to the internal rate of return (IRR). Market/Book Value is a measure of the value of the underlying investment porfolio, which changes every day with markets, to the sum of participant balances plus accrued interest. Crediting Rate is the interest rate applied to the book value of a stable value investment contract, typically expressed as an effective annual yield. 2020 Standard deviation is a measure of risk that gauges the variability of actual returns from their expected values and the dispersion of these variations over time. Excess return represents the fund total return minus the return of the index. Beta measures the fund’s sensitivity to market movements in the broad based index. Tracking error represents the volatility of fund return relative to the benchmark, calculated as the standard deviation of the return relative to the benchmark. Interest Rate Risk is the risk that changes in interest rates may reduce (or increase) the market value of a bond. As interest rates rise, bond prices usually fall, and vice versa. Disclosures 1. Fund allocations, characteristics, and statistics shown represent the actual R.R. Donnelley Stable Value Fund. 2. R.R. Donnelley's Stable Value Fund inception date is December 2006. Since this fund is customized it has no historical performance prior to December of 2006. Performance is provided by Northern Trust. 3. The "Current Expense Ratio" for this investment option is the management fee charged by the investment manager for the fund. The amount shown is an annual fee, although as a practical matter the fee is assessed throughout the year. The investment manager's fee may change based on the total portfolio value as well as contractual changes. There may be additional operational and administrative fees charged that are not captured in this expense ratio. 4. Although these risks are managed through quality, diversification, and duration guidelines, they are not completely eliminated. In general the bond market is volatile, and bond funds entail interest rate risk (as interest rates rise, bond prices usually fall, and vice versa; this effect is usually more pronounced for longer-term securities). Bond funds also entail the risk of issuer or counterparty default, issuer credit risk, and inflation risk. Although the goal of stable value funds is to preserve principal, such funds can lose value, and there is no guarantee that this fund will return all principal. Due to the nature of this investment option and the intended smoothing of performance facilitated by the wrap contract, the underlying investment portfolio may have market gains or losses which have not fully accrued to participant accounts. While wrap contracts are designed to help provide stability of principal and a smooth credited rate of interest, there may be circumstances under which the wrap contract may not meet these objectives. Past performance is not a guarantee of and may not be indicative of future results. This investment option is not guaranteed by any party and may result in negative performance and the loss of principal. This information is subject to change over time. While the information included herein is taken from sources believed to be reliable, no representations or warranties are provided as to the accuracy of the information. Information is as of the date noted and may not reflect the current strategy or positioning. Cash positions and other holdings may not be shown in top holdings, if applicable. Managers may hold cash or securities not included in the stated benchmark or category. These summary reports are available through this site as a tool for evaluating the investment options available under the plans. There are a number of other tools available for analyzing investments and investment funds. This web site and the tools and information provided herein should not be your sole source of information in making investment decisions under the Plan. The investment option is a custom strategy fund. This description is only intended to provide a brief overview of the fund. The fund manager may change over time. This fund may invest in certain securities or stock of R.R. Donnelley or its affiliates..
Load more

Recommended publications
  • Voya Stable Value Fund
    Release Date 06-30-2021 Voya Stable Value Fund Asset Class: Stability of Principal rated or higher) as well as stable value collective funds and money market funds. Security backed contracts are backed Fees by high quality, marketable fixed income securities which provide a credited rate of interest based on the yields of the Management fees: 0.14% underlying securities. The underlying fixed income security exposure is obtained by investing in collective funds managed Trustee fees: 0.06% by the sub-advisor for this purpose or may be purchased directly by the sub-advisor. Securities backing investment Voya® fees: 0.00% contracts are all investment grade at time of purchase with a minimum average quality rating of AA. The various Total Annualized Gross Fund Fee: 0.20% investments that make up the portfolios are blended together to provide a combined daily accrual rate, net of all Fund and Total Annualized Net Fund Fee: 0.20% portfolio expenses. In addition to the annual Fund Fee, the Fund is charged for Risks general operating expenses (such as audit, custody service, There is no guarantee that the fund will meet its investment tax form preparation, legal and other expenses) to a objective. While the fund strives to maintain stability of maximum of 0.03% of Fund assets per year. The investment principal, it is possible to lose money by investing in this fund. portfolios in which the Fund invests also incur expenses, including expenses related to the Fund's outside management Withdrawals and Transfers fees, wrapper agreements, transfer agency fees, brokerage Transfers from the Fund to other investment options are commissions and expenses.
    [Show full text]
  • City of Phoenix Law Department Outside Investment Counsel Stable Value Wrap Contract Services Request for Proposals (Rfp) No
    CITY OF PHOENIX LAW DEPARTMENT OUTSIDE INVESTMENT COUNSEL STABLE VALUE WRAP CONTRACT SERVICES REQUEST FOR PROPOSALS (RFP) NO. 14-LAW-003 DEADLINE FOR RECEIVING OFFER Offers must be submitted by 3:00 p.m. MST on Wednesday, September 10, 2014 (“Offer Date”). Offers received after 3:00 p.m. MST may not be considered. Offers must be delivered to: Daniel L. Brown Acting City Attorney City of Phoenix Law Department 200 West Washington Avenue, 13th Floor Phoenix, AZ 85003-1611 If Offeror wishes to provide outside counsel legal services, Offeror must submit one (1) original and one (1) copy for a total of two (2) copies in a package marked: “Offer, Outside Counsel Legal Services, RFP No. 14-LAW-003.” For all Offers, the name of the Offeror should be listed on the outside of the package. All Offers must be complete by providing all of the information requested under Section III, Submission. DEADLINE FOR WRITTEN QUESTIONS Questions regarding this RFP should be submitted in writing to Stephanie Hart, via FAX (602) 534-7524 or e-mail to [email protected], no later than Wednesday, September 3, 2014, by 3:00 p.m., MST. Answers will be provided in the form of addenda and posted to the RFP Internet site by Monday, September 8, 2014. CONTACT PERSON CD ROM and hard copy formats of the RFP are also available upon written request and at no charge. For more information or an alternate format of this RFP, please contact [email protected] or (602) 262-6761 (voice)/800-534-5500 TTY – for Text Telephone Users only).
    [Show full text]
  • Stable Value Fund Third Quarter 2020
    MINNESOTA SUPPLEMENTAL INVESTMENT FUND - STABLE VALUE FUND THIRD QUARTER 2020 FUND OVERVIEW AS OF 9/30/20 INVESTMENT OBJECTIVE The Minnesota Supplemental Investment Fund - Stable Value Fund (the "Fund") is an 1 investment option that seeks to provide safety of principal and a stable credited rate ANNUALIZED PERFORMANCE of interest, while generating competitive returns over time compared to other comparable investments. Periods Ending ICE BofA 3Mo. 9/30/20 Fund (%) Benchmark (%) T-Bill (%) INVESTMENT STRATEGY 3Q'20 0.61 0.15 0.04 The Minnesota Supplemental Investment Fund - Stable Value Fund, managed by YTD 1.91 0.72 0.64 Galliard Capital Management, is primarily comprised of investment contracts issued by financial institutions and other eligible stable value investments. All contract 1 Year 2.61 1.23 1.10 issuers and securities utilized in the portfolio are rated investment grade by one of 3 Year 2.52 2.25 1.69 the Nationally Recognized Statistical Rating Organizations at time of purchase. The 5 Year 2.34 2.02 1.20 types of investment contracts in which the Fund invests include Security Backed Investment Contracts. These types of contracts seek to provide participants with 10 Year 2.43 1.58 0.64 safety of principal and accrued interest as well as a stable crediting rate. SECURITY BACKED INVESTMENT CONTRACTS are comprised of two components: FUND FACTS 1) investment contracts issued by a financial institution and 2) underlying portfolios Fund Category Stable Value of fixed income securities (i.e. bonds) whose market prices fluctuate. The investment Inception Date October 1, 1995 contract is designed to allow participants to transact at book value (principal plus Fund Assets $1,682,271,495 accrued interest) without reference to the price fluctuations of the underlying fixed income securities.
    [Show full text]
  • John J. Kalamarides Senior Vice President Retirement Strategies & Solutions
    John J. Kalamarides Senior Vice President Retirement Strategies & Solutions Prudential Retirement 280 Trumbull Street, H17C Hartford, CT 06103 A business of Prudential Financial, Inc. September 26, 2011 Mr. David A. Stawick, Secretary Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street, N.W. Washington, D.C. 20581 Ms. Elizabeth M. Murphy, Secretary Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-1090 Re: File No. S7-32-11C, “Stable Value Contract Study” Dear Mr. Stawick and Ms. Murphy: Prudential Financial, Inc. (“Prudential Financial”) appreciates this opportunity to respond to the Securities Exchange Commission’s (the “SEC”) and the Commodity and Futures Trading Commission’s (the “CFTC” and together with the SEC, the “Commissions”) joint request for comments (the “Request for Comments”) in connection with the joint study regarding stable value contracts (“SVCs”) under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Prudential Financial is a financial services leader with approximately $883 billion of assets under management as of June 30, 2011 and operations in the United States, Asia, Europe, and Latin America. Prudential is committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. Prudential Financial’s retirement business (“Prudential Retirement”) delivers retirement plan solutions for public, private, and non-profit organizations. Services include state-of-the-art record keeping, administrative services, investment management, comprehensive employee investment 1 education and communications, and trustee services.
    [Show full text]
  • STABLE VALUE August 2018 PERSPECTIVES
    STABLE VALUE August 2018 PERSPECTIVES Stable Value: Unique Protection in a Rising Rate Environment At its core, stable value is a fxed stable value fund seeks to smooth the income investment, so it stands to underlying bond portfolio’s returns, reason that plan sponsors, consultants, earning a relatively consistent rate and stable value investors may be that generally tracks market rates over concerned about the prospect of rising time. Rather than recognize mark-to- interest rates. However, we believe that market losses immediately, a stable the unique protections provided by value fund’s investment contracts are stable value will beneft investors in a designed to amortize declines in mar- rising rate environment. ket value and protect investors from the volatility that a bond fund might Should stable value investors brace experience due to changes in interest Nick Gage Principal themselves for a rising interest rate rates or other factors. environment? While certainly a risk in the minds How would an increase in interest rates A stable value fund’s of all fxed income investors, rising beneft a stable value investor? interest rates should not be cause for When interest rates increase, the investment contracts undue concern for those invested in underlying bond portfolio’s cash fows are designed to stable value. In fact, we expect that can be reinvested at higher rates, amortize declines rising rates will ultimately beneft sta- which should ultimately translate in market value and ble value investors. Though essentially to a higher crediting rate for stable a fxed income investment, a stable value investors. A stable value fund’s protect investors from value fund offers the added protection investment contracts protect its the volatility that of investment contracts (issued by investors from the mark-to-market a bond fund might banks and insurance companies) that losses associated with rising rates by are designed to protect investors from smoothing the bond portfolio’s returns experience due to losses resulting from rising interest over time.
    [Show full text]
  • UNDERSTANDING STABLE VALUE GALLIARD CAPITAL MANAGEMENT Stable Value
    UNDERSTANDING STABLE VALUE GALLIARD CAPITAL MANAGEMENT Stable Value STABLE VALUE STRUCTURE WHAT IS A STABLE VALUE FUND? “Stable value funds are capital preservation investment options available in 401(k) plans and other types of savings plans. They are invested in a high quality, diversified Investment fixed income portfolio that is protected against interest rate volatility by contracts from Contracts banks and insurance companies. Stable value funds are designed to preserve capital while providing steady, positive returns. Stable value funds are considered a conservative and low risk investment compared to other investments offered in 401(k) plans.”1 Sov/ Supra 2% Cash 4% U.S. Gov’t/Agy 9% RELATIVE RISK LEVEL OF A STABLE VALUE FUND Marketable Fixed Income Securities Other U.S. Gov’t 11% Conservative Moderate Aggressive Tax Muni 5% Residential MBS 35% Money Markets Bond Funds Stock Funds Stable Value Corporates 26% CMBS 8% WHAT IS THE INVESTOR PROFILE FOR A STABLE VALUE FUND? A stable value fund may be appropriate for someone seeking to safeguard Illustrative of an investment contract. principal or balance a portfolio having more aggressive investments. Not representing that the above is an actual Galliard portfolio. HOW DOES STABLE VALUE COMPARE WITH A MONEY MARKET FUND? Both stable value funds and money market funds seek principal preservation. Stable value funds have historically produced higher returns than money market funds with less volatility.1 Galliard’s stable value DOES A STABLE VALUE FUND MAINTAIN A CONSTANT NAV OF $1.00 PER strategy seeks safety SHARE LIKE A MONEY MARKET MUTUAL FUND? of principal and a No.
    [Show full text]
  • OPERS Stable Value Fund
    Release Date:09-30-2019 OPERS Stable Value Fund .......................................................................................................................................................................................................................................................................................................................................... Benchmark Overall Morningstar Rating™ Morningstar Return Morningstar Risk USTREAS T-Bill Cnst Mat Rate 3 Yr QQQ Average Low Rated against 488 Short-Term Bond funds. An investment's overall Morningstar Rating, based on its risk-adjusted return, is a weighted average of its applicable 3-, 5-, and 10-year Ratings. See disclosure for details. Investment Strategy Performance The Stable Value Fund seeks to preserve principal value and 20 Total Return% provide a relatively stable rate of return comparable to 15 as of 09-30-19 investment grade intermediate fixed income yields over two 10 Investment Benchmark to four years. 5 The Fund invests in a diversified portfolio of stable value 0 contracts issued by banks, insurance companies and other -5 financial institutions and a variety of fixed income -10 Average annual, if greater instruments included U.S. Government and agency -15 securities, mortgage-backed securities, asset-backed than 1 year securities and corporate bonds. The return is affected by the YTD 1 Year 3 Year 5 Year 10 Year Since Inception general level of interest rates as well as cash flows, 1.91 2.54 2.24 2.02 2.12 3.61 Fund Return % including those from participant
    [Show full text]
  • Stable Value Investment Management Services
    STATE OF VERMONT OFFICE OF THE STATE TREASURER 109 State Street, 4th Floor MONTPELIER, VERMONT 05609-6200 802-828-2301 www.vermonttreasurer.gov SEALED BID REQUEST FOR PROPOSAL STABLE VALUE INVESTMENT MANAGEMENT SERVICES DATE: MONDAY, MARCH 19, 2012 QUESTIONS DUE BY: MONDAY, APRIL 2, 2012 DATE OF BID OPENING: MONDAY, APRIL 16, 2012 TIME OF BID OPENING: 4:00 P.M. LOCATION OF BID OPENING: 109 State Street, Montpelier, VT, 4th Floor ALL NOTIFICATIONS, RELEASES AND AMENDMENTS WILL BE POSTED AT: www.vermonttreasurer.gov THE OFFICE OF THE STATE TREASURER WILL MAKE NO ATTEMPT TO CONTACT BIDDERS WITH UPDATED INFORMATION. IT WILL BE THE RESPONSIBILITY OF EACH BIDDER TO PERIODICALLY CHECK THIS SITE FOR THE LATEST DETAILS. CONTACT: Katie George TELEPHONE: (802) 828-3708 E-MAIL: [email protected] FAX: (802) 828-2772 STATE OF VERMONT OFFICE OF THE STATE TREASURER 109 State Street, 4th Floor MONTPELIER, VERMONT 05609-6200 802-828-2301 www.vermonttreasurer.gov SEALED BID INSTRUCTIONS All bids must be sealed and must be addressed to: Office of the State Treasurer 109 State Street, 4th Floor Montpelier, VT 05609-6200 BID ENVELOPES MUST BE CLEARLY MARKED ‘SEALED BID’ AND SHOW THE PROPOSAL TITLE, OPENING DATE AND NAME OF BIDDER. All bidders are hereby notified that sealed bids must be in the Office of the State Treasurer by the time of the bid opening. Bidders are cautioned that it is their responsibility to originate the sending of bids in sufficient time to ensure receipt by the Office of the State Treasurer prior to the time of the bid opening.
    [Show full text]
  • Ibew Local Union 102 Welfare, Pension and Surety Funds
    IBEW LOCAL UNION 102 WELFARE, PENSION AND SURETY FUNDS Quick Reference Guide Effective May 1, 2019 Important Notice: This is an outline of the principal plan provisions of the IBEW Local Union 102 Welfare, Pension and Surety Plans and is not intended to completely describe the Plan provisions. In the event of any discrepancy between this outline and the Plans, the Plan Documents shall govern. For further information, please review your Summary Plan Description or contact the office of the Administrator, I. E. Shaffer & Co., at P. O. Box 1028, Trenton, NJ 08628. Telephone 1-800-792-3666. 08/22/19 IBEW LOCAL UNION 102 WELFARE FUND Effective May 1, 2019 Eligibility Rules You will become eligible for Plan “A” on the first day of the second calendar month following an employment period of not more than three (3) consecutive months during which you have been credited with 300 hours of service. Once you satisfy this requirement, you will remain eligible for at least 3 consecutive months. All eligibility shall be determined on the basis of gross hours paid. To maintain your eligibility thereafter, you must be credited with at least 300 hours of service each calendar quarter. Your eligibility will terminate on the last day of the second calendar month which follows that calendar quarter during which you receive credit for less than 300 hours of service. Your eligibility will terminate on: If you do not have 300 hours of service during the period of: February 28 October 1 to December 31 May 31 January 1 to March 31 August 31 April 1 to June 30 November 30 July 1 to September 30 Once you have been enrolled in Plan “A” for a continuous period of two consecutive years, effective on the first day of the twenty-fifth (25th) month, your coverage will be increased to Plan “B” which includes Dental, Vision and Hearing benefits.
    [Show full text]
  • Plan Now SIF Stable Value Fund
    Minnesota Deferred Compensation Plan MNDCP Plan Now SIF Stable Value Fund What is the SIF Stable Value Fund? The Supplemental Investment Fund (SIF) Stable Value Fund is available to participants in About Stable Value the Minnesota Deferred Compensation Plan, the Health Care Savings Plan, the Unclassified • Stable value funds are a popular Employees Retirement Plan and the Public Employees Defined Contribution Plan. investment choice for retirement participants who want a The SIF Stable Value Fund, seeks to preserve principal while providing positive returns with limited volalitility. Stable value funds are typically considered to be among the lower risk conservative fixed income investment options offered in retirement plans. option that seeks to provide capital preservation and a competitive yield RELATIVE RISK LEVEL OF A STABLE VALUE FUND • According to the Stable Conservative Moderate Aggressive Value Investment Association, Money Markets Bond Funds Stock Funds more than $701.3 billion is Stable Value invested in stable value assets1 • Estimates show that stable What is the investor profile for a stable value fund? value products are offered A stable value fund may be appropriate for someone seeking to safeguard principal or in one-half to two-thirds balance a portfolio having more aggressive investments. of all defined contribution plans2 How does stable value compare with a money market fund? Benefits of Stable Value Stable value funds and money market funds both seek to preserve principal and earn • A conservative investment interest. While these types of funds have similar investment objectives, stable value funds option that is only available and money market funds are built differently with each utilizing a distinct approach to in defined contribution plans achieve their respective investment objectives.
    [Show full text]
  • The Stable Value Investment Association, the American
    THE STABLE VALUE INVESTMENT ASSOCIATION, THE AMERICAN BANKERS ASSOCIATION, AND THE FINANCIAL SERVICES ROUNDTABLE RESPONSE TO THE U.S. COMMODITY FUTURES TRADING COMMISSION AND THE SECURITIES AND EXCHANGE COMMISSION ACCEPTANCE OF PUBLIC SUBMISSIONS REGARDING STUDY OF STABLE VALUE CONTRACTS RELEASE NO. 34-65153; FILE NO. S7-32-11 SEPTEMBER 26, 2011 TABLE OF CONTENTS I. Executive Summary..........................................................................................................3 II. The Commissions Should Exclude Stable Value Contracts from the Definition of “Swap.”.........................................................................................................................4 A. Stable Value Contracts are not “Swaps.” ................................................................4 B. Stable Value Contracts do not Have an “Underlying Reference Asset.” ................6 C. The Dodd-Frank Definition of “Stable Value Contract” is Sufficiently Broad. ......................................................................................................................6 D. The Proposed Definition of “Swap” and Related Interpretive Guidance do not Provide an Appropriate or Sufficient Framework for Evaluating How Stable Value Contracts Should be Regulated. ................................................7 III. Stable Value Contracts are Customized Risk Management Agreements Used Solely to Reduce Volatility and Risk for Stable Value Funds..........................................8 A. Stable Value Contracts are Structured in
    [Show full text]
  • Stable Value: Not All Funds Are Created Equal
    New York Life Stable Value Investments Stable Value: Not all funds are created equal By Frederick W. Spreen III Retirement plan consultants have varying opinions and approaches when it comes to fund selection for the capital preservation investment option. There are few industry standards for evaluating risk or performance, like other investment classes. So, as a named plan fiduciary, your selection process and understanding of capital preservation options is imperative. This paper will discuss the unique Stable Value asset class and how to approach the review process with plan sponsors. Risk Mitigation Portfolio It is important to understand how a fund is allocating assets Mitigating risk for plan fiduciaries adds value to your and why. In the current interest rate environment, there are relationships. The more risk you can mitigate, the more value you differences between portfolios that need to be taken into add in the eyes of your client, especially C-Suite leaders. consideration. A fund’s duration directly impacts a manager’s Products that minimize investment volatility, provide attractive ability to raise capital for liquidations, put new capital to work, returns and solid guarantees would weigh heavy on the scale of and manage the inverse relationship between price and yield for importance for any fiduciary. fixed income securities. In a normal interest rate environment, Understanding Fund Structure: What is with an upward sloping yield curve, lower duration generally means lower yielding securities. Compared with higher duration Important & Why? funds, lower duration portfolios have greater cash flows from Guarantees maturing securities and allow managers to track the prevailing Read your fact sheets and product guides carefully.
    [Show full text]