Underlying Investments
See associated assets.
BIC
See bank investment contract.
Constant Duration
A stable value investment strategy that employs a portfolio of actively managed assets that are constantly rebalanced to maintain a targeted duration. In a constant duration (also known as an “evergreen”) structure, the stable value investment contract does not have a defined maturity date. (Compare to buy and hold and maturing.)
Downgrade
See credit quality downgrade.
FSP AAG INV-1
See FASB Statement of Position (FSP) AAG INV-1.
Investment Guidelines
Guidelines established between a plan sponsor or trustee (and/or a wrap contract issuer) and an investment manager that dictate the investment parameters and risk exposures that the investment manager may assume in the investment account. In fixed income portfolios, the guidelines typically address permissible asset classes and/or securities, sector allocation limits, issuer diversification, and minimum credit quality constraints.
Nationally Recognized Statistical Ratings Organization (NRSRO)
A firm that evaluates the financial quality of an institution’s debt, the claims paying ability of life insurance companies, and/or the deposit credit rating of banks. Examples of NRSROs include Fitch Ratings, Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Services.
Principal
The face amount of a deposit to a debt obligation or investment contract on which interest is earned.
Stable Value
Stable value is a unique asset class available only in corporate and governmental tax-qualified defined contribution plans, as well as some tuition assistance plans. When offered as an investment option in such a plan, stable value seeks to offer capital preservation, liquidity, and returns typically higher than other options focused on capital preservation, such as money market funds. Stable value […]
