Download Stable Value Option

Aetna 401(k) Plan
Stable Value Option
31 March 2017
What is the Stable Value Option’s goal?
The Stable Value Option (SVO) seeks to preserve
principal while maintaining competitive yields that
generally move in the direction of prevailing market
interest rates over time. Holdings in SVO are credited
with a fixed rate of interest rate declared in advance.
Historically, the rate of interest was subject to change
every January 1st and July 1st. Beginning July 1, 2012,
rates of interests were changed to reflect quarterly resets.
What is the SVO investment strategy?
The SVO pursues its goals by entering into investment
contracts with insurance companies or banks that provide
for the return of principal and a stated interest crediting
rate. The SVO credited rate is determined by blending
interest rates generated by these investment contracts
and other cash investments. All investment contracts are
supported by investment portfolios holding a diversified
mix of high quality, publicly traded, fixed-income
securities. The average credit quality of all of the
investments backing the SVO will be AA/Aa or better as
measured by S&P or Moody’s credit rating services.
Derivative securities can be used for hedging and
replication purposes only. U.S. Treasury securities and
U.S. Treasury futures are used to manage interest rate
risk.
Is the SVO appropriate for me?
In building a retirement portfolio, it is important to include a
mix of equity (stock) and fixed income (bond) funds.
Equity funds help build the value of your portfolio over the
long term, while fixed income funds provide income and
stability of principal. As a short- to intermediate-term,
fixed income fund, the SVO may be appropriate if you are
looking for a conservative investment that is designed to
preserve your principal balance while typically offering a
competitive rate of return versus money market
alternatives.
What are the risks?
The SVO is at the lower end of the risk/reward spectrum.
Book value accounting helps to protect your account from
the fluctuations in principal that can be associated with
other investment options available to you under the Plan.
While the SVO is a low risk option, if any of the current
investment contracts or any future investment contract is
fully or partially liquidated, an adjustment could be
reflected in your account and could cause your balance to
move up or down. At this time, the Plan has no intention
to liquidate any investment contracts in the SVO.
Performance
Cumulative
Total Return
The SVO
3 Months
0.50%
Year to Date
0.50%
Annualized
Total Return
1 Year
2.08%
3 Year
2.10%
5 Year
2.17%
10 Year
3.10%
Historic performance is not necessarily indicative of actual future investment
performance, which could differ substantially. The current interest rate credited to
the Stable Value Option reflects fees of approximately 0.31% consisting of
investment management fees of 0.04%, sub advisor and underlying collective trust
administrative fees of 0.05%, stable value wrap contract fees of 0.18% and plan
administration fees of 0.04%. These fees are subject to periodic adjustments based
on the underlying costs of managing the Stable Value Option and the administrative
cost of the Plan. All returns are calculated in U.S. dollars.
Characteristics
Duration
3.30 years
Market Risk Profile
This is the risk that an investment will fluctuate in value.
An investment with low market risk will experience small
changes in value and offer less opportunity for high returns;
one with high market risk may experience larger changes
in value, but may also tend to provide greater returns to
outpace inflation over the long term.
low
medium
high
Aetna 401(k) Plan
Stable Value Option
31 March 2017
Who is the SVO investment manager?
Sector Distribution
The SVO is managed by Invesco Advisers, Inc.
(Invesco). Invesco is considered an industry leader
specializing in the management of stable value funds and
is currently managing $55.1 billion in stable value assets
as of 3/31/17. Invesco is a unit of Invesco Ltd, one of the
largest global investment management firms with
approximately $812.9 billion of assets under
management as of 12/31/16.
U.S. Treasury
32.5%
Corporate Bonds
25.1%
Agency Mortgage Backed
12.7%
Asset Backed
14.9%
Invesco uses multiple sub-advisors to invest portions of
the SVO. Currently, the sub-advisors include Invesco
Advisers, Inc., BlackRock Financial Management, Inc.,
Voya Investment Management, Jennison Associates,
PIMCO, Goldman Sachs and New York Life. Subadvisors used in the SVO are subject to change at the
discretion of Invesco.
How do I buy or sell the SVO?
CMBS
5.7%
Agency
2.0%
Non-Agency Mortgage Backed
1.0%
Non-Us Govt/Agency
0.7%
Cash and Equivalents*
5.4%
*Includes cash held in products
Quality Distribution
AAA/Aaa & Cash
73.5%
AA/Aa
To buy or sell the Stable Value Option, call the toll-free
number provided by your benefits department, or utilize
the Plan’s internet order execution capabilities.
6.4%
A
13.1%
BBB/Baa
5.6%
NR
1.4%
Rate Resets
Historical Credited Interest Rates
Currently, the SVO is credited with a fixed quarterly rate
of interest declared in advance. The current crediting
rate was reset on April 1, 2017.
January
April
2017
2.00%
2.15%
2016
2.05%
2015
July
October
2.10%
2.10%
2.15%
2.20%
2.25%
2.20%
2.10%
2014
1.90%
1.95%
2.05%
2.05%
2013
2.30%
2.25%
2.15%
1.95%
Past performance does not guarantee future results. All returns are calculated in
U.S. dollars. The current rate credited to the Stable Value Option is net of
investment and operating fees previously detailed in the Performance section.