Stable value is a short-term investment currently available only in qualified retirement plans, including 401(k), 403(b) and 457(b) retirement plans. Representing a $1 trillion industry, stable value investments are backed by life insurance or commercial bank issued contracts and therefore hold a stable net asset value, which makes them attractive to investors. Stable value is a common investment option, sometimes representing about 10% of assets in defined contribution retirement plans.
Stable value investments have served as a way to generate a guaranteed minimum return and guaranteed return of principal – a dollar in, a dollar out – and have historically earned higher returns than comparable money market investments. Typically, stable value investors are generally closer to retirement age who are seeking to maximize their return but minimize their risk.
These types of investments are typically pursued by financial advisors or plan fiduciaries that represent companies with defined contribution retirement plans.
Stable value investments are primarily supported by a fixed income portfolio invested in a variety of securities, including corporate bonds, mortgage backed securities, U.S. government bonds and some high-yield securities.
Conducting thorough and transparent due diligence is essential for advisors and fiduciaries in selecting the right stable value investment. Factors such as company size, employee demographics, company industry and amount of retirement plan assets play a key variables when determining the best available option.
Our team at Cairnavigate has deep expertise in Stable Value will provide rigorous due diligence for your plan and participants. We take a consultative approach that begins with evaluating the company and its needs, determining the best stable value investment options, and presenting those findings to advisors and fiduciaries.
Evaluate the investment performance over a period of time at relative benchmarks: 1 year, 3 year, 5 year and 10 year