Stable value provides the following unique combination of benefits:
- Principal preservation
- Consistent, positive returns
- Liquidity for participant benefit payments
The stable value industry is $939 billion allocated across four types of stable value:
$939 Billion1 Invested in Stable Value as of 9/30/2022
Stable value is only available in tax qualified plans, most notably defined contribution plans,
and is offered in approximately 3 out of 4 defined contribution plans according to the Alight
Solutions Trends & Experience in Defined Contribution Plans survey.
Stable value funds provide bond-like returns with exceptionally low volatility, which provides
investors with an attractive risk/return profile.
15 Year Risk Vs Return as of 9/30/2022
To learn more, read What Makes Stable Value Attractive
Shown another way, the table below illustrates the relative risk (as measured by standard
deviation) and gross returns of stable value, money market, intermediate bonds, and stocks
over time. The returns for stable value are similar to intermediate bonds but the volatility is the
lowest of all asset classes shown. This results in a very attractive risk/return profile highlighting
that stable value has historically been successful delivering on its objectives.
How Stable Value Stacks Up: 1/31/2000 – 9/30/2022
To learn more, read the Stable Value FAQ
Volatility of Monthly Returns: 1/31/2000 – 9/30/2022
Stable Value Vs Money Market Funds: 1/31/2000 – 9/30/2022
While the volatility is similar to money market funds, the growth of a dollar over the same
period is much more comparable to intermediate bonds.
Growth of a Dollar: 1/31/2000 – 9/30/2022
Stable value has four types of funds: individually managed accounts, pooled funds, insurance
company general accounts, and insurance company separate accounts. Each type of stable
value fund has different characteristics and it is up to the plan sponsor to decide which type is
best suited to meet their plan’s needs. However, no matter the type of fund, all have a contractual
element that protect against interest rate volatility in order to provide plan participants with
safety, liquidity, and attractive returns.
Performance & Duration2 by Segment: 3/31/2016 – 9/30/2022
To learn more, read the Guide to Stable Value Market Segments
Footnotes
- SVIA Stable Value Quarterly Characteristics Survey for 3Q2022
- SVIA 2015 Survey of Membership with Consistent Participation for 2006-2015 and SVIA Stable Value Quarterly Characteristics Survey for 3Q2022
Definitions
“Stable Value” is a simulation of book value returns in a hypothetical fund holding intermediate bonds and stable value wrap contracts, with crediting interest rates reset monthly using the industry accepted crediting rate formula. The bond returns incorporated into the simulation are monthly market value returns from the Barclays Intermediate Government/Credit Bond Index, with gains/losses reflected in future crediting rates by amortizing market-vs.-book values over intermediate bond index durations. This simulation incorporates no ongoing cash flows into or out of the fund. Returns illustrated are gross before any fees.
“Money Market” is a simulation of money market returns from the iMoneyNet MFR Money Funds Index. Returns illustrated are gross before any fees.
”Intermediate Bonds” is a simulation of market value bond fund returns from the Barclays Intermediate Government/Credit Bond Index. Returns illustrated are gross before any fees.
“Stocks” is the S&P 500 Index with dividends reinvested: a widely used barometer of U.S. stock market performance; as a market-weighted index of leading companies in leading industries, it is dominated by large-capitalization companies. Returns illustrated are gross before any fees.
“Short Bonds” is a simulation of market value bond fund returns from the Barclays Capital U.S. 1-3 Year Government/Credit Bond Index. Returns illustrated are gross before any fees.
