With worries over fiduciary responsibilities, stable-value funds — which offer steady and predictable returns consistent with a conservative principal protection vehicle — can be a solid retirement plan option for certain segments of a workforce, according to experts who spoke at this week’s 401(k) Summit sponsored by the American Society of Pension Professionals and Actuaries.


Most stable-value investments — accounting for 13% of all defined contribution plan assets — generally are a good match for risk averse near-retirees, who want a core portfolio with an attractive return or other employees seeking an alternative to money market funds and short-term bond funds.

“It’s a good product that serves a purpose for retirees who are at the doorstep of retirement trying to figure out what to move into,” said Rod Bare of Russell Investments. “It’s been a rough few years; now is a good time to upgrade your plans if they have a weaker stable-value fund provider.”

However, financial advisors sometimes have a hard time picking the right SVF, as there isn’t a common database to compare. “Analytics on stable value take a lot of homework, but try to get a good sense of a reasonable structure,” said Gina Mitchell of the Stable Value Investment Association.

Across the board though, SVFs are reliable investments, with almost the same rate of return from 1989 to 2010.

“Recent market turmoil in 2008 shocked a lot of folks … and it woke folks up to complexity of the market,” Bare said. Although many plan sponsors wanted to drop SVFs due to regulations as a result of the financial collapse and other market changes, Bare cautioned against that. “Work through the decision carefully because with the right provider, [SVFs] can be the right product that can serve the right cohort well.”

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