New Players Join Stable Value Wrap Community
By Randy Myers Wrap capacity in the stable value industry finally appears to be expanding. Wrap contracts guarantee book value withdrawal rights for investors in stable value products. When the credit markets froze in 2008, the banks and insurers that issue wrap contracts began to reassess the risks embedded in that business. In many cases, […]
401(k) Industry Moves Toward Benchmarking
By Randy Myers For years, smart companies have benchmarked their performance against their peers to identify opportunities for improvement in a variety of areas, from how efficiently they manage their inventory to how quickly they collect on their accounts receivable. One area they have often overlooked, especially if they were not a very large employer, […]
Stable Value Funds Seen Coping if Interest Rates Start to Rise
By Randy Myers The long downward trend in interest rates since the early 1980s has been beneficial to the stable value industry. Now, many economists believe that trend is in jeopardy, prompting questions about how the industry will respond. Declining rate environments favor stable value funds because their crediting rates—the actual earning rates posted to […]
JPMorgan Chase Teams with Barclays to Develop Stable Value Index
By Randy Myers While stable value funds emerged from the recent credit crisis relatively unscathed—none lost money and returns held well above those on money market funds—the crisis did have some fallout. Specifically, the market value of many stable value portfolios temporarily fell below book value during the crisis, prompting many wrap issuers to push […]
Investors Look to Stable Value
By Gina Mitchell, SVIA Defined contribution investors have taken all that the financial markets have thrown at them: an historic market upheaval and a prolonged recession in a low-interest rate environment with increased volatility. Unlike most investors, defined contribution investors have an investment that has withstood the market’s battering: stable value. And, according to SVIA’s […]
SVIA Stable Value Composite Introduced
By Gina Mitchell, SVIA A question that always comes up with any investment is, “What are the returns?” The answer to that question typically looks at past performance as the most important indicator. Most stable value funds have created a model to illustrate past performance for the stable value asset class. Many simulate stable value […]
401(k) System Passes “Trial by Fire”
By Randy Myers Not so long ago—the 1980s, to be precise—it was commonly argued that the self-directed, largely participant-funded 401(k) retirement system would implode if the financial markets experienced a severe crisis. Individual investors, the theory went, would not have the sophistication or the stomach to successfully negotiate a dramatic upheaval in the financial markets. […]
Prudential Strategist Argues for Moderation by Fed in Raising Interest Rates
By Randy Myers With the worst of the financial crisis apparently behind us, the Federal Reserve may try to push interest rates higher toward the end of this year, says Robert Tipp, chief investment strategist for Prudential Insurance Co.’s Prudential Fixed Income unit. But he wouldn’t advise it. A more prudent course, he argues, would […]
Stable Value Performs “Admirably and As Advertised” through Financial Crisis
By Randy Myers Stable value funds proved to be one of the few success stories during the financial crisis of 2008-09. At a time when most asset classes were tumbling, stable value funds continued to generate consistently positive returns for their investors. “Stable value performed admirably and as advertised,” SVIA President Gina Mitchell told industry […]