Stable value—the very name conjures up a picture of, well, stability.

And that’s apparently working for defined contribution plan sponsors, who are increasingly regarding stable value as a more attractive capital preservation option for plan participants.

Read: 3 ways sponsors can meet DC plan goals

That’s according to MetLife’s 2015 Stable Value Study, which also found that most stable value fund providers and advisors who were interviewed for the study and were familiar with money market fund (MMF) reforms predicted that the use of money market funds in defined contribution plans will decline over the next few years.

A whopping 82 percent of DC plan sponsors familiar with those MMF reforms—SEC amendments to the rules governing such funds—regard stable value more highly than alternatives.

And 77 percent of large plan sponsors added stable value options over the past two years because stable value provides better returns. That’s up from just 38 percent in the 2013 version of the study.

Providing a capital preservation option was the leading reason plan sponsors gave for offering stable value, at 65 percent. Fifty percent cited a guaranteed rate of return, and 49 percent said the reason was better returns compared to money market and other capital preservation options.

But there are other factors that play into the advisability of stable value as an option in DC plans—not that those factors are all that well known.

The study found that only 17 percent of plan sponsors and 23 percent of plan advisors realize that stable value returns have exceed inflation over the past 25 years.

They’re not all that well informed about stable value’s performance against money market funds, either. The study found that almost half of sponsors (47 percent) are unaware that stable value returns have outperformed money market returns: 22 percent believe that stable value and money market returns have been about equal and 21 percent don’t know how the returns compare.

Additionally, four percent actually believe that money market funds have performed better than stable value over this time period.

Instant Insights /

Stable value rising in popularity with DC plan sponsors

More From HR Executive

Related Stories

Recommended For You