In the first scenario of a steady, extended climb in rates, the firm found that investors would likely see the value of investments in mutual funds that hold short-term or medium-term bonds decline over a three-year period, while holders of stable-value accounts would see their balances continue to grow steadily.
There are several reasons, one of the more subtle among them being that the insurer can fund the product entirely with medium- and long-term bonds, since there are no payments in the short term.