Stable Value Fund (SVF)

Fund Availability

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

Fund Overview: 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.

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.

 

 
Performance, Net of Fees

 
 
Characteristics

 
 
Expense Ratio

 
 
Risks and Disclosures

 

 


Performance, Net of Fees - September 30, 2019

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Stable Value Fund 0.48% 1.36% 1.79% 1.67% 2.15% 2.40%
Fund Benchmark 0.56% 1.81% 2.39% 1.54% 1.92% 2.24%
 

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

 

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Characteristics - September 30, 2019

Fund Statistics

  SVF SVF Benchmark
Effective Duration 2.9 0.2
Spot Yield* 2.20% 1.81%**
Average Rating AA AA
 
* Does not reflect the deduction of fees.
** The benchmark yield number is effective yield, instead of spot yield.
 

Maturity Breakdown

SVF Maturity Breakdown chart


Quality Breakdown

SVF Quality breakdown chart


Sector Breakdown

SVF Sector Breakdown chart


Insurance Contracts

Name Moody's Rating Credit Summary Reports
Aegon USA A1 Aegon Report
American United Life Insurance Company American United Life Insurance Company Report
Prudential A1 Prudential Report
Voya Financial A2 Voya Report
 

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Expense Ratio

For 2018, SVF’s expenses were equal to 0.55% of the fund’s total assets.

 

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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.

Historical returns are not indicative of future performance. For further discussion of the Fund’s investments strategies and risks, please refer to the Wespath Investment Funds Description and related documents. This is not an offer to purchase securities.

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.

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SVF Benchmark


The Stable Value Fund performance benchmark is the Bank of America Merrill Lynch 3-Month Treasury Bill Index, effective January 1, 2016. The index measures the investment performance of the 3-month sector of the U.S. Treasury Bill market. 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 is a custom index that started on December 1, 2002 to coincide with the inception of the Stable Value Fund. This index does not reflect actual performance; performance has been adjusted to represent the assumed rate of return that would have been achieved if the BofA ML 1-5 Year Corp. Govt Index had been wrapped for book value returns. This index has been established and calculated by Standish Mellon Asset Management, is not sponsored or licensed by BofA Merrill Lynch, and is not available for direct investment. The index assumes a 12 basis point annual book value wrap fee from inception to June 30, 2004; 10 basis points from then until December 31, 2008; 15 basis points from then until December 31, 2011; and 20 basis points thereafter. These wrap fee assumptions are Standish's view of the industry's average during these points in time. The Crediting Rate formula applied is: CR = (((1+YTM) * ((MV/BV)^(1/D)))-1, where CR is equal to the book value crediting reset rate, YTM is the market yield to maturity of the underlying asset(s), MV is the market value of the underlying asset(s), BV is the book value of the synthetic wrap contract and D is the duration of the underlying asset(s).

Fund Facts

Inception November 18, 2002
Exp. Ratio 0.55% for 2018
Benchmark Custom Benchmark
Fund Assets $379 Million as of September 30, 2019
Holdings September 30, 2019
SVF Crediting Rate Available here
For More Information Summary Fund Descriptions – P Series and Investment Funds Description – P Series and the related Statement of Additional Information.
 

Fund Managers

The following individuals are responsible for the selection and monitoring of external asset managers:

frank-holsteen

Frank Holsteen

Director, Public Equities and Fixed Income
With Wespath since 2012
B.A. from Lake Forest College
 
 

Management

San Francisco-based Standish, BNY Mellon AMNA 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

* Signatory to the United Nations Principles for Responsible Investment

 
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