Are there different types of stable value investment options?

Yes, there are a variety of types of stable value investment options offered to the market. They may be offered by investment managers, trust companies, or insurance companies in a variety of structures, such as separately managed accounts, commingled funds, or guaranteed insurance accounts. Sometimes a stable value investment option is managed directly by a plan sponsor. The exact type of stable value investment that you have available in your retirement plan is decided by your plan sponsor.

Stable value investment options may be managed and structured in a variety of ways, but the important similarity is the use of investment contracts, issued by banks and insurance companies. These investment contracts enable stable value to be benefit responsive, which is the ability to transact at contract value while also providing the mechanism to minimize return volatility. The type of funds that purchase or offer stable value investment contracts are commonly named Capital Preservation Fund, Fixed-Interest Fund, Principal Protection Fund, GIC Fund, Guaranteed Fund, Stable Interest Fund, or Stable Value Fund, among others.

What are GICs and Wraps?

In stable value investing, GICs and wraps are essentially two of several types of investment contracts.