J.P. Morgan has made changes to its Stable Asset Income Fund that are designed to insure it will remain open to new investors as it continues to grow, the company said Wednesday.

Some stable value funds have been closed to new investors because of an inability to get the wrap insurance needed to make the funds possible. The insurance has not been available to some funds because of a 12-month put option that allows retirement plan sponsors to withdraw from the fund at book value, rather than market value, any time within 12 months of giving notice.

This put option has caused some insurance companies to not provide the needed wrap, although J.P. Morgan's stable value fund has not had a problem as yet, a spokesman says.

To prevent any future problems and to assure that the fund will remain open to new investors, J.P. Morgan is removing the 12-month put option from its Stable Asset Income Fund.

Stable value funds, which are usually made up of assets from many 401(k) plans, make up one-quarter of defined contribution retirement plan assets. However, some funds have been closed to new investors because of the inability to obtain the wrap, putting the fund category at risk of becoming scarce as an investment option.

The change to the J.P. Morgan Stable Asset Income Fund will not affect an individual participant's ability to make transactions. J.P. Morgan provides bundled defined contribution services to more than 650 clients and 1.8 million plan-level participants, representing more than $125 billion in retirement plan assets. The fear was that as the Stable Asset Income Fund grew it might encounter the wrap problem now facing others, the spokesman says.

"The stable value pooled fund marketplace is feeling certain unique pressures from wrap providers because of the book value put option," says Peter Chappelear, managing director and head of J.P. Morgan Asset Management's stable value business. "We evaluated various remedies to the problem, and determined that eliminating the put option was the only solution that provided complete relief while benefiting long-term investors."

--Karen DeMasters