Charles Schwab has informed retirement plan sponsor clients that the company will liquidate its $7.6 billion Schwab Stable Value Fund by April 30.
In a telephone interview, Schwab spokesman Mike Peterson said the decision, despite solid performance by the collective trust fund, reflects the difficult operating environment for stable value products amid continued low interest rates and challenges in securing sufficient wrap coverage.
Mr. Peterson said clients were notified Tuesday. They will have six months to select another capital preservation vehicle, such as another stable value fund available on Schwab's open-architecture platform or a money market fund.
The decision to liquidate was posted on the website of the company's banking affiliate, Charles Schwab Bank, which had a combined $12.3 billion in six collective trust funds as of Sept. 30.