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 Manager
Refers to an investment manager, typically a QPAM, responsible for management and oversight of a stable value investment option. The stable value manager may manage all or only some of the associated assets of the stable value investment option.
Wash
See equity wash.
Book Value Accounting
The accounting methodology allowed under AICPA Statement of Position (SOP) 94-4-1 and FASB Statement of Position (FSP) AAG INV-1 by which the valuation of a fully benefit-responsive stable value investment contract is allowed to be reported at book value with market value or fair market value provided as additional disclosures. (If the plan sponsor is a governmental entity the accounting methodology is described under GASB Statement No. 53.) Certain pre-defined criteria by FASB […]