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Immediate Release
September 11, 2002

Stable Value Assets Up by 10% Despite Turbulence in Financial Markets Retirement Investors Stop the Bleeding in their Retirement Savings With Stable Value Funds

September 10, 2002… Over the past seven months retirement investors in 401(k) plans and IRAs have turned to Stable Value Funds to stop the bleeding from losses in their retirement savings.

Over the past seven months, Stable Value IRA Mutual Funds have almost doubled to $2.44 billion. Stable Value Funds in 401(k) plans have grown by 9% on average, receiving over $15 billion in new retirement savings. In fact, Stable Value Funds have grown on average by 10% despite continuing market turbulence.

"Retirement investors are looking for a safe place to invest their money. They have found that safe haven in Stable Value Funds. Stable Value Funds provide a conservative and consistent return, currently 5.5 percent. Plus, Stable Value provides a great cushion against the gyrations of the stock market," says Stable Value Investment Association President, Gina Mitchell.

Individual investors have flocked to Stable Value IRAs during the first half of this year. "This response demonstrates the pent-up demand from individual investors for Stable Value," says Mitchell. Until recently, Stable Value Funds were only available through 401(k) plans and only now are five companies offering Stable Value IRA Mutual Funds.

"401(k) investors are adjusting their asset allocation," says INVESCO's Kim McCarrel, one of the largest 401(k) Stable Value managers in the U.S. "The good news is that investors are practicing diversification so Stable Value is receiving positive and steady increases," explains McCarrel.

"If there is a down side to this, it is that 401(k) investors had to learn from personal experience and suffer through three years of declining 401(k) balances to understand their risk tolerance. It will take a much longer time for the new diversification converts to make up the losses they have experienced," concludes SVIA's Mitchell.

Stable Value Funds offer the best complement to equities because they are less volatile than other fixed income options such as intermediate bonds and money market funds, and their returns exceed money market rates by one to two and a half percentage points. In fact, Stable Value Fund returns have beaten money market funds by at least one and a quarter percentage points annually for the past five years.

Stable Value Funds are fixed income portfolios that invest in a combination of high-quality bonds and investment contracts issued by insurance companies and banks. Unlike bond funds, Stable Value investors are shielded from price fluctuation and their accounts rarely lose value.

Stable Value Funds, sometimes called interest income funds or principal preservation funds, can be found in almost a quarter of all 401(k) plans and now IRA mutual funds and 529 tuition assistance plans.

SVIA is a non-profit organization dedicated to educating the public on the importance of saving and investing for retirement and the contribution that Stable Value can make in providing for a financially secure retirement.