Barclays Capital launched a stable value index late last year. Called the Stable Income Market Index, it is intended to serve as a market performance benchmark for asset portfolios within stable value funds.

The index is defined as a low-risk blend of asset classes from the Barclays Capital U.S. Aggregate Bond Index. It focuses on shorter maturities and provides diversified exposure to debt from the government, credit and securitized sectors.

"The launch of the stable income market index should help plan sponsors measure the performance of stable value asset managers against a benchmark that more fairly reflects the constraints imposed by wrap providers," said Lev Dynkin, head of quantitative portfolio strategy at Barclays Capital. "The index was developed by Barclays Capital Research at the request of, and in close consultation with, stable value market participants, including pension funds, asset managers, insurance companies and banks that provide insurance wraps for stable value funds to protect them from significant drops in market value versus book value."

The new index , which many analysts say sounds promising, may fill a gap in the stable value world, but it still has some limitations. For example, it doesn't take into account the impact of the benefit responsive wrap contracts, as Galliard Capital Management has previously noted. Even those that would adopt the new index acknowledge that it may take some time for the index to become a mainstream tool in the stable value world.

"People have used various benchmarks for stable value funds including the Barclays Capital Intermediate Aggregate Bond Index, Treasuries and money market fund indices," said Ron Heath, managing director of sales and marketing at Morley Financial Services Inc., which has $14 billion under management. "But none of them have been perfect representations for a stable value fund.

One of the reasons is because many of the benchmarks are market value benchmarks, while stable value provides participants with book value returns. The Barlcays index is an attempt to provide plan sponsors a way to measure market value performance.

"It's relatively new, so managers are looking at how they can work with it," Mr. Heath said. "We believe that the new index has promise as an appropriate benchmark for stable value portfolios."

"It's a great thing that the industry can use as a data point," said Eric Hasenauer, managing director and head of sales for Aviva Investors North America. He added that his firm isn't currently using the index, but "if an investor we were to work with wanted to use the Barclays stable value index as a major index, we would be willing to do it."

The new index will be published with monthly history going back to July 1999, according to Barclays Capital.