By Randy Myers
It’s all rainbows and lollipops ahead for stable value, according to industry insiders.
While stable value managers and wrap providers didn’t use that exact language when they discussed industry trends at the 2025 SVIA Fall Forum in October, they did paint a mostly rosy picture of the asset class, pointing to increasingly competitive stable value crediting rates relative to money market funds and to opportunities for innovation and expansion into new markets.
“I think, going forward, it’s going to be a good environment for stable value,” said Edward “EJ” Tateosian, vice president and investment director at Loomis Sayles. He noted that stable value crediting rates have become competitive with money market returns after lagging for a few years, and said expectations for additional Federal Reserve rate cuts, combined with a still-steep yield curve, should be beneficial for the asset class.
Tateosian was joined on a panel by moderator Andrew Erman, senior vice president of Stable Value Solutions Inc., a subsidiary of Transamerica; Kara Marr, vice president and head of stable value at Reinsurance Group of America (RGA); Shane Johnston, portfolio manager with Morley Capital Management Inc.; and Peter Charette, director of stable value at MassMutual.
Marr said she is hopeful that declining short-term interest rates will normalize cash flows into stable value and support more competitive crediting rates after a difficult two-year stretch. Johnston agreed that falling rates improve stable value’s positioning relative to money market funds and should continue to reduce the number of questions plan sponsors and consultants field about that comparison.
Charette was optimistic, too, albeit more cautiously.
“We haven’t seen some of the cash flow we’d love to see, but I think our perspective—and my perspective—is that hopefully the worst is … behind us for now,” he said. He expressed hope that as crediting rates and cash flows continue to normalize, along with additional Fed cuts, “we could actually be well positioned 12 to 18 months from now.”
Asked where the industry has opportunities to innovate, the panel suggested changes are most likely at the portfolio-construction and use-case level, rather than in wholesale product redesign. Charette said the idea of adding private assets to stable value portfolios is creeping into conversations but cautioned that any effort must be balanced against the need for liquidity. He characterized such discussions as innovation “on the fringe,” aiming to make the asset class incrementally better while preserving day-to-day stability and access.
Johnston framed innovation in terms of solutions: using stable value within structures that address specific plan needs—such as custom target-date designs or other wrappers—rather than selling it only as a stand-alone option. He sees traction building there. He also cited the 403(b) market as a potential avenue for growth, even if it may take a “long time” to penetrate more deeply. (While some 403(b) plans offer stable value, many use a multi-vendor model that can complicate use of the asset class.)
Marr encouraged efforts to tweak stable value for the decumulation phase of retirement. She also said RGA is focused on finding ways to boost yields in stable value portfolios without weakening their underlying risk profile.
Tateosian said Loomis Sayles is often asked what it could do to expand stable value’s opportunity set—to invest in new ways that boost yield—while adhering to wrap managers’ investment guidelines.
“We are continually trying to discuss different things that we can do from a guideline perspective to open up that opportunity set,” he said. In recent years, the firm has been able to expand beyond AAA-rated securitized assets into AA and even single-A ratings where wrap providers agree. Looking ahead, he said the firm is now assessing whether it also may be appropriate to include private securities in stable value portfolios.
A lighthearted question—whether stable value can be made “fast and furious”—drew pragmatic answers. Johnston said the last several years provided a stress test for the asset class—rising rates, lower market-to-book ratios, and negative cash flows—and that the product navigated those choppy waters as designed. That experience suggests there may be ways to optimize stable value funds for similar environments in the future, but he kept the focus on using stable value technology to solve concrete problems for participants.
Tateosian reiterated that any bid to juice returns ultimately runs through wrap constraints, especially tests on average portfolio credit quality (often set around AA- to A). Loosening those tests could widen the opportunity set, but only alongside adjustments that keep wrap providers comfortable.
Marr cautioned that “not everybody wants a fast and furious Buick,” arguing that some clients will prefer the traditional “steady-Eddy” profile while others may seek tailored variants. That implies case-by-case solutions rather than a one-size-fits-all redesign.
Charette likened the goal to making a better Buick—iterative improvements around the edges for efficiency, yield enhancement, and plan-sponsor usability—without abandoning the reasons clients buy stable value in the first place.
When the moderator asked what truly drives trends—demography, technology, or something else—the group pointed first to market demand from participants and plan sponsors. Johnston said the market’s needs should lead, with technology defining what is possible.
Marr emphasized demographics, noting the large cohort nearing retirement and the motivation to develop products that serve decumulation better; she argued stable value has a head start relative to other retirement-income ideas.
Tateosian described the process as a continuous client conversation in which managers revisit guidelines and utility sets to see what else can be contemplated within acceptable parameters. Innovation, he said, is “just an ongoing thing. It just lives and breathes day to day, year to year with our clients.”
In a final audience question, Ben Soltsov asked how stable value might stack up against money market funds in a future where money market yields settle somewhere between roughly 2.5% and 3.5%. Johnston said the historical rule of thumb—a 100- to 150-basis-point advantage for stable value—may compress in such an environment, particularly if the yield curve flattens. That possibility makes guideline flexibility and other value-add levers more important. Tateosian said he would expect stable value to maintain an advantage over money market funds, although outcomes will vary with market conditions, especially credit spreads.
“In environments like today, where the opportunity set’s a bit more narrow, our yield is going to be on the lower end of things (and) our risk is going to be on the low end of things,” Tateosian said. “As markets have more volatility and spreads become more interesting to us, we’re going to cycle toward those opportunities. And so the yield is going to go higher at that point.”
He added that duration provides an additional source of total return for stable value funds as the yield curve declines, which money market funds do not capture to the same degree.
Overall, the tone was constructive but restrained. Panelists saw an improving backdrop for stable value as short-term rates drift down and market-to-book ratios heal, yet they repeatedly tied potential enhancements to wrap requirements and liquidity demands. Innovation, they suggested, is progressing in measured steps: expanded investment guidelines where justified, looking to solution-oriented packaging (for example, custom target-date uses), and making thoughtful adjustments for decumulation—all while preserving the features plan sponsors value: principal stability, daily liquidity within plan rules, and competitive crediting rates relative to money market funds over the long term.