Equity Wash
A provision in a stable value investment option that requires any transfer a participant makes from the stable value investment option to a competing option to first be directed to any other investment option not designated as a competing option for a period of time (usually 90 days).
Group Annuity Contract
A contract issued by an insurance company that allows a tax-qualified plan to purchase retirement annuities for plan participants. Most guaranteed investment contracts are group annuity contracts.
Liquidity Buffer
Investments, typically a money market fund or STIF, in a stable value investment option that may be used as a first source of liquidity to absorb immediate cash flow needs without requesting withdrawals from other stable value investment option assets.
Office of the Comptroller of the Currency
See Comptroller of the Currency, Office of.
Risk
There are many types of risk in finance, but in general it is the probability of actual returns being less than expected returns. Investors should always carefully consider an investment’s objectives, risks, and fees before investing. Although stable value investment options generally seek to preserve investor capital, provide liquidity, and generate a steady, positive return, it is important to recognize that […]
STIF
See short-term investment fund.
Amortization
With respect to a bond, a payment schedule which will gradually discharge a debt in equal installments consisting of principal and interest. With respect to separate account GICs or synthetic GICs, the process of recognizing realized and unrealized market value gains and losses into the book value over a specified period of time via the crediting rate.
Buy and Hold
A stable value investment strategy that refers to a portfolio of assets that are typically purchased and then held to maturity. In this buy and hold strategy, the investment contract associated with such assets typically terminates at the maturity of the assets. (Compare to constant duration and maturing.)
Credit Risk
The risk that an investment will default, i.e., the borrower or guarantor (the bond or investment contract issuer) will not pay principal and interest as scheduled. (See also impaired securities.)
