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What is a "Wrap Provider?"
Posted on 11/8/11 at 1:44 pm
Posted on 11/8/11 at 1:44 pm
I'm looking at the Putnam Stable Value fund as a choice for our 401k plan and on the one-sheet it lists some "Wrap Providers" in it's asset mix. Rabobank Nederland, Monumental Life, Pacific Life, and JP Morgan Chase are listed as the Wrap Providers. We are moving our 401k from Prudential to Fidelity and yours truly is on the fund selection committee of two.
Would that be investments held by the above institutions "wrapped" into an investment which would be held by the Putnam fund?
Clearly, I'm confused and would appreciate any education I can get. Even a point in the right direction would be appreciated.
ETA to add: Putnam Stabe Value One-Sheet
Would that be investments held by the above institutions "wrapped" into an investment which would be held by the Putnam fund?
Clearly, I'm confused and would appreciate any education I can get. Even a point in the right direction would be appreciated.
ETA to add: Putnam Stabe Value One-Sheet
This post was edited on 11/8/11 at 1:45 pm
Posted on 11/8/11 at 1:55 pm to Carlos Santannaclaus
The link below provides a basic explanation of a wrap as applied to bonds. The "Wrap Providers" are those entities that are providing the credit enhancement to some of the bonds in the fund's portfolio.
Wrap (as explained by Wikipedia)
Wrap (as explained by Wikipedia)
Posted on 11/8/11 at 5:12 pm to Carlos Santannaclaus
Here is an informative link and includes a white paper to read, SV funds are opaque and could depend on the insurance wrapper to keep shareholders whole. It's not an easy subject matter to delve into as the holdings of said funds can very hard to locate/evaluate. You are in a fiduciary capacity in the situation you are in, obtain as much info from the provider as possible. I have invested in SV funds in various plans for years for some amount of fixed income exposure and never lost a penny (other than recognizing the skim lost to the ins co's and fund) but there is always a first time.
LINK
LINK
PS - Putnam went through an extended period of time when their returns stunk, was very poorly run. They seem to have gotten back on track but questions are always better made upfront than after the fact if you know what I mean.
ETA - Don't take my comments to be negative on SV funds, they can be very useful especially in the rate environment we are in. It's just when I invest in something "safe" I don't expect negative surprises as I am taking risks in a lot of other areas.
LINK
LINK
PS - Putnam went through an extended period of time when their returns stunk, was very poorly run. They seem to have gotten back on track but questions are always better made upfront than after the fact if you know what I mean.
ETA - Don't take my comments to be negative on SV funds, they can be very useful especially in the rate environment we are in. It's just when I invest in something "safe" I don't expect negative surprises as I am taking risks in a lot of other areas.
This post was edited on 11/8/11 at 5:27 pm
Posted on 11/8/11 at 5:44 pm to tirebiter
Thanks, tirebiter.
I downloaded the White Paper and opened it up. At 51 pages I'll have to go sit in my chair with a drink and delve into it. From the quick scroll it looks pretty complex.
I appreciate you taking the time to explain all that.
I downloaded the White Paper and opened it up. At 51 pages I'll have to go sit in my chair with a drink and delve into it. From the quick scroll it looks pretty complex.
I appreciate you taking the time to explain all that.
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