What are stable value funds? How do they work? What are the benefits? What are the risks? These are some of the basic questions most have. Below we will answer these questions and others to help you increase your knowledge and understanding of stable value funds.
Why can’t I find a “ticker” for my stable value investment option?
Stable value investment options do not exist in publicly available investment vehicles, such as mutual funds.
Is there a stable value fund for my IRA or taxable brokerage account?
Because of regulatory rules, stable value as an asset class is not available in either IRAs or taxable accounts.
What is an equity wash and why is it required with stable value?
An equity wash is a contractual provision in a stable value investment option that requires any transfer a participant makes from the stable value investment option to a competing option to first be directed to any other investment option for a period.
Is stable value regulated?
Yes, stable value investment options, investment contracts, investment managers, and other service providers such as insurance companies involved in stable value have multiple layers of regulatory oversight.
What types of contracts are used in stable value funds?
In stable value, GICs, wrap contracts, and group annuity contracts are used to help deliver stable value.
How does stable value compare to other investment options?
Over a business cycle, most stable value investment options have historically provided gross returns similar to short- to intermediate-maturity bond strategies but without the daily mark-to-market volatility.
Are there different types of stable value funds?
Stable value is often categorized into one of three types –individually managed accounts, pooled funds, and insurance company general and separate accounts.
What are the risks of investing in stable value?
Although stable value has a long, well established track record of preserving capital, providing liquidity, and generating steady, positive returns, it is important to recognize that all investments have risks.
What is stable value?
Stable value generally refers to a relatively low-risk asset class that focuses on capital preservation and liquidity, while providing steady, positive returns to participants within certain types of savings plans.
What role can stable value play in my savings and investment strategy?
Stable value is usually offered by a plan sponsor in a defined contribution plan as a low-risk investment that focuses on capital preservation and liquidity, while providing steady, positive returns to a plan’s participants.