Note (01/31/2005): Morningstar has re-categorized all open-end mutual funds in the Stable Value category. Fund companies have been changing the investment mandates for these funds in response to increased scrutiny from the SEC about the stable-value structure. While Morningstar has eliminated the category for open-end investments, we will continue to support the category in our custom and separate account databases. Morningstar will use the Short-Term Bond category as a proxy for assigning Morningstar Ratings and percentile ranks to stable value custom funds. (Morningstar rates and ranks custom funds against the most similar open-end category.)
Stable-value portfolios seek to provide income while preventing price fluctuations. The most common stable-value portfolios invest in a diversified portfolio of bonds and enter into wrapper agreements with financial companies to guarantee against fluctuations in their share prices. These wrapper agreements typically provide price stability on a day-to-day basis, thereby insulating each portfolio's net asset value from interest-rate volatility. Therefore, their true overall durations are effectively zero.
Abbreviation: VL
Broad Asset Class: Taxable Bond
Primary Index: Barclays Aggregate Bond
Secondary Index: 3 Year Constant Maturity Treasury (CMT)