Stable Value Fund (SVF)

Fund Availability

SVF is only available to participants in Wespath Benefits and Investments defined contribution benefit plans.
 

Fund Characteristics
Fund Performance (Net)
Risk and Disclosures

Fund Objective, Strategy and Holdings

The Stable Value Fund (SVF) seeks preservation of capital while earning current income higher than that of money market funds. The Fund invests in a broad range of high-quality, low-risk, fixed-income instruments. These include U.S. government and agency bonds, corporate bonds, mortgages, asset-backed securities and other similar types of investments.

The manager enters into contracts with highly rated financial institutions and insurance companies ("Wrap Contracts"). Wrap Contracts provide a principal protection feature designed to protect investors from interest rate risk to assure investors can transfer or withdraw the value of all contributions and accumulated interest.

SVF seeks to maintain a constant unit price of $1.00 and credit participants with interest at month-end. Each month, Wespath Benefits and Investments posts on its website the interest rate earned by the Fund during the previous month.

Management

San Francisco-based Standish Mellon Asset Management is the lead manager of the Fund. The Fund engages the services of highly regarded fixed-income managers to manage a portion of the Fund's assets.

Asset Managers

  • Dodge and Cox *
  • Standish Mellon Asset Management *
  • Neuberger Berman Fixed Income, LLC *
  • Prudential Investment Management *

* Signatory to the United Nations Principles for Responsible Investment

Fund Characteristics as of December 31, 2016

Fund Statistics

  SVF Custom Benchmark1
Effective Duration 3.66 0.24
Spot Yield* 1.76% 0.49%**
Average Rating AA AAA
 
* Does not reflect the deduction of fees.
** The benchmark yield number is effective yield, instead of spot yield.
 

Maturity Breakdown

SVF_chart1


Quality Breakdown

SVF_chart2


Sector Breakdown

SVF_chart3


Insurance Contracts

Name S&P Rating Moody's Rating Credit Summary Reports
Aegon USA AA- A1 Aegon Report
Prudential AA- A1 Prudential Report
Voya Financial A A2 Voya Report

 

Performance, Net of Fees - December 31, 2016

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Stable Value Fund
0.35%
1.36%
1.36%
2.51%
2.41%
3.11%
Benchmark1
0.09%
0.33%
0.33% 2.16%
2.19%
2.87%
 

See Risk and Disclosures for more information regarding Net of Fees Performance.

Expense Ratio

For 2015, SVF’s expenses were equal to approximately 0.33% of the fund’s total assets.

Risk and Disclosures

All investments carry some degree of risk that will affect the value of the Fund’s holdings, its investment performance and the price of its units. As a result, loss of money is a risk of investing in the Fund. SVF is subject to the following principal investment risks: market risk, investment style risk, security-specific risk, credit risk, country risk, currency risk, derivatives risk, interest rate risk, liquidity risk and prepayment risk.

For further discussion of the Fund’s investments strategies and risks, please refer to "Principal Investment Strategies and Principal Investment Risks of the Funds — Stable Value Fund" in the Wespath Investment Funds Description.

Lending of Portfolio Securities

The Fund seeks to earn additional income by lending a portion of its portfolio securities to brokers, dealers and other financial institutions. The loans are secured at all times by cash and liquid high-grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. In addition, losses could result from the reinvestment of the cash collateral received on loaned securities.

The Fund generally does not invest in companies that derive more than 10% of their revenue from gambling or from the manufacture, sale or distribution of alcoholic beverages, tobacco-related products, adult entertainment, weapons, or the management or operation of prison facilities.

 

1 On January 1, 2016, the benchmark for the Stable Value Fund became the Bank of America Merrill Lynch 3-Month Treasury Bill Index. Prior to this, the benchmark was the Bank of America Merrill Lynch Wrapped 1-5 Year Corporate Government Index. The BofA ML Wrapped 1-5 Year Corp. Govt Index was a custom index that started on December 1, 2002 to coincide with the inception of the Stable Value Fund. At the inception of the SVF, Standish Mellon (the fund manager) began calculating this custom benchmark return based on market values of the BofA Merrill Lynch Wrapped 1-5 Year Corporate/Government Index that coincided with the inception date of the Fund. Wespath believes that this is a fairer comparison to the results achieved by the Fund as the Fund inception occurred after a period of declining interest rates. The “wrapped” feature of the index replicates a synthetic GIC and captures and amortizes market value gains and losses over future periods. Therefore, by utilizing a benchmark with the same inception date of the Fund, market value gains associated with the declining interest rate environment prior to the inception of the Fund will be appropriately excluded from the custom benchmark returns.

Fund Facts

Inception November 18, 2002
Exp. Ratio 0.33% for 2015
Benchmark Custom Benchmark1
Fund Assets $0.44 Billion as of January 31, 2017
Holdings December 31, 2016
SVF Crediting Rate Available here
For More Information Investment Funds Description
 

Fund Manager

frank-holsteen

Frank Holsteen

Director, Fixed Income
With Wespath since 2012
B.A. from Lake Forest College
 
 
constance-christian

Constance Christian, CFA

Manager, Fixed Income
With Wespath since 2016
BSBA and MBA from Xavier University
MA from DePaul University
 
 
 
©2017 Wespath Investment Management, a division of Wespath Benefits and Investments, a general agency of The United Methodist Church. All Right Reserved.