What risks should I be aware of when 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, including the potential risk of loss of some or all of an investment.

Any investment option is subject to general investment risk and there is no guarantee that it will achieve its objectives. Investors should always carefully consider the investment objectives, fees, and all of the risks of any investment before investing.

Investing in stable value is subject to many similar risks present when investing in fixed income, including, but not limited to, credit risk, default risk, interest rate risk, issuer risk, liquidity risk, manager risk, market risk, regulatory risk, and tax and accounting risk.

Importantly, there are also some risks that are of particular importance to the stable value asset class. The specific risks you assume as a participant invested in your stable value option will depend upon the type of stable value investment vehicle that your plan sponsor has chosen as appropriate for your retirement plan. However, some risks to consider when investing in stable value include, but are not limited to:

Importantly, a stable value option may be subject to risks other than those described above. This list is not meant to be exhaustive. Please contact your plan sponsor or plan administrator if you have any questions regarding your particular investment.

What are GICs and Wraps?

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