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Editor's Corner

In my “corner” of Kentucky, we are usually at a racetrack when we talk about something that “broke well from the gate and is well-positioned going into the first turn.” But that same description can apply to the progress of stable value funds this year.

The overall growth of the defined contribution (DC) markets continues to drive our industry forward. Even with flat to slightly shrinking allocations in the first quarter of 2007, stable value balances continue to grow with the booming DC markets. And while the current uncertainty around stable value as a default option under the Pension Protection Act may cause the asset class to lose marginal market share to the new lifecycle funds, the use of stable value in these same lifecycle funds will minimize the impact over time (at first, primarily with larger plans).

Stable value also continues to deliver in many forms. Plans like those of the Federal Reserve and University of California have generated great results with diversified portfolios of general account GICs. Other large plans have delivered with portfolios exclusively wrapped with synthetics. Some plans and pooled funds use combinations of wraps and diversified general account portfolios as well as versions of separate account stable value.

SVIA, the parent organization of this publication, remains influential and important to all of us in the industry. Challenges from the SEC, FASB, GASB, and DOL have been met with energy and a common purpose. While we have not always gotten everything we desired, we are far better off through industry cooperation rather than each of us lobbying with our individual firms.

This issue of Stable Times touches on issues both inside and slightly outside our niche in the industry. We peer inward – beneath synthetic wraps – to innovations in bond portfolios, where managers using small 5 to 10 percent allocations to non-traditional asset classes have added value. We examine the broader DC world and the attention being paid to fees. We focus on broader behavioral analysis of 401(k)s and how allocation, transfer, and contribution trends can affect participation.

I hope the information within this issue helps you keep pace with the stable value industry. As a long-time reader and some-time contributor to Stable Times, I recognize that the value of this publication is dependent upon the relevance of the material and the expertise and insights of our authors. You, as a reader and an industry participant and perhaps an expert in your field, can help Stable Times continue being relevant, topical, and insightful. Please don’t hesitate to submit an article or to contact us with your ideas.

We wish you the best with your respective efforts to advance stable value through the first quarter and the course of the year, and we look forward to seeing everyone at the spring SVIA conference in April.