The Consultants Guide to Stable Value

Abstract

Stable value is a unique asset class that provides consistently better returns than money market funds. It is an asset class with very low return volatility, protection of principal and interest, and low fees (many times, even lower than money market funds). It is also little known, especially outside the U.S. defined contribution (DC) retirement market. When I worked as a consultant, I had little knowledge of stable value. Now, as a former consultant working in the stable value industry, I know that investment consultants who are looking for proactive solutions and new ideas for their clients need to learn about this important asset class. The purpose of this article is to provide consultants with a basic foundation of knowledge about stable value and how it is used (primarily in the DC world). Certainly, any consultant who works with 401(k) plans or other DC plans, where stable value is most popular, needs to have a basic understanding of stable value. But consultants who work with defined benefit plans, endowments, foundations, Taft-Hartley plans, non-profit hospitals, even high net worth individuals in the 401(k) rollover market, can also benefit from an understanding of stable value for its potential applications in those markets.

Note: This is a description of the paper and not the actual abstract.

Keywords: Stable Value, GIC, GIC's

JEL Classification: G23