It's all you ever wanted to know about stable value. A new consumer pamphlet has been released by the Stable Value Investment Association to be used by plan sponsors and money managers alike to explain the complex investment option.
Stable value investment options represent about 25% of the assets of employee-directed 401(k) plans and a total of $250 billion. Stable value is offered as an option in two-thirds of those plans, according to the SVIA.
The pamphlet walks participants through the basics of the industry and covers everything from what is stable value to stocks and how they compare to stable value investing.
In the pamphlet, the organization cites two persuasive studies, one from Dreyfus and another from John Hancock Funds. The Dreyfus Fund study said 68% of investors will only consider a safe or guaranteed investment vehicle. The John Hancock study said 23% of participants now contributing to a stable value fund said they would not contribute as much to the defined contribution plan if it did not contain a stable value fund.
"I think one of the things that makes this timely, is with the return of market volatility . . . (stable value) allows you to use more equity and preserve principal," said Gina Mitchell, president of the group.