Volatility
The variability of returns in a security or portfolio over time. Volatility is measured by the standard deviation of returns of the investment. stable value investment options tend to have very low volatility because of book value accounting, which is regulated by FASB and GASB.
Blended Rate
The aggregate yield on the investments in a stable value investment option. (See also crediting rate.)
Contract-holder
The owner of a stable value investment contract, typically the plan sponsor or trustee. The contract-holder is usually the party responsible for taking any actions allowed or required under the terms of such contract.
Duration
A measure of the price sensitivity of a financial instrument or investment portfolio due to changes in interest rates, expressed in years, and calculated as the time-weighted present value of cash flows.
Funding Agreement
An insurance contract under which the issuer guarantees principal, accumulated interest, and a future interest rate for a specified period of time. Unlike guaranteed investment contracts, funding agreements are not group annuity contracts and can be issued to entities other than tax-qualified plans.
Investment Options
One or more investment portfolios (whether mutual funds, commingled funds, separately managed accounts or other investment vehicles) offered within a defined contribution plan, into which participant and employer contributions may be directed. This may include equity options, bond options, balanced options, target date or risk-based options, an employer stock option, a stable value option, a money market option, or other types of options.
Net Crediting Rate
The crediting rate after adjusting for some or all expenses and any special provisions of the product, expressed as an effective annual yield.
Put Option
A stable value term (unrelated to derivatives) that describes the ability of a plan to exit a stable value commingled fund at contract value, subject to a specified notice period. A put option may mean either (1) a provision under the fund documentation that an invested plan can exit the fund at contract value by the end of […]
Stable Value Investment Association (SVIA)
A non-profit organization dedicated to educating retirement plan sponsors and participants about (1) the importance of saving for retirement and (2) the contribution that stable value investment options can make toward achieving retirement security. The SVIA provides leadership and representation for stable value investments before the media, educators, legislators, regulators, and opinion leaders, and it provides a forum […]
