What is stable value? What are the objectives of 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. Stable value is available only in tax-qualified retirement savings plans, such as defined contribution plans, as well as in some tuition assistance plans. It is not available in either mutual funds or Individual Retirement Accounts (IRAs).

Stable value investment options are one of the most common capital preservation options available in retirement savings plans. According to the SVIA 19th Annual Stable Value Investment & Policy Survey, stable value investment options are available in over 167,000 retirement plans and tuition assistance plans, including 401(k), 457, 403(b), and 529 plans.

Stable value focuses on preserving retirement plan participants’ invested capital (or principal) while providing liquidity and steady, positive returns that have exceeded money market investments over time.* Over a business cycle, most stable value investment options seek to provide returns similar to short- to intermediate-maturity bond strategies without the return volatility associated with those strategies.

While the structure of, or investments within, stable value may vary, the important similarity in all stable value investment options is the use of investment contracts, which are issued by banks and insurance companies. These contracts help smooth return volatility and importantly, they typically allow participants to transact at their invested balance plus any accrued interest. This characteristic is what is known to stable value practitioners as benefit responsiveness.

Stable value investment options may have many different names. For instance, Capital Preservation Fund, Fixed-Interest Fund, Principal Protection Fund, GIC Fund, Guaranteed Fund, Stable Interest Fund, or Stable Value Fund are common stable value names. Yet, despite this variation in names, stable value investment options all seek to offer participants the same basic benefits: capital preservation, liquidity, and steady, positive returns that have exceeded those found in money market investments over time.*


*Past performance is not a guarantee of future results.