Content area
Full Text
The Wells Fargo Stable Return Fund will limit investments effective Jan. 2, the latest restricting inflows over concerns that new money in a continuing low interest-rate environment will lower yields for existing investors.
Only plans that have a record-keeping and trustee relationship with Wells Fargo can enter the $29.9 billion fund as new investors next year, said David Ferry, senior director at Galliard Capital Management Inc., Minneapolis, the fund's adviser.
"If the fund had accepted an unrestricted amount of new money in this low-interest-rate environment, we had concerns that there could be a dilutive effect on the crediting rate," said Mr. Ferry. He was referring to the interest rate on the book value of the stable value fund, which is described as the effective annual yield.
"This is purely driven by low rates and expectations of low rates in the future," he said. "These are unprecedented times."
Restricting inflows like Wells Fargo and others have done -- known as a soft close -- "makes sense (for some funds) so...