As we enter into the new year, different trends will come and go, but the need for a balanced retirement plan will never fade. One retirement product that has stood the test of time, for good reason, is a stable value fund.

Given recent marketplace volatility, the product can provide peace of mind for plan participants, especially since stable value funds can offer strong returns and guarantees in a low-risk environment.

Each new year means new opportunities. Whether you’ve recommended stable value funds in the past or it’s a newer product for you, the new year can be a good time to rethink your retirement planning sales strategy and consider adding different products to your 2018 investment lineup.

As you evaluate what products to add, here are a few important points to understand about stable value funds and the benefits the product can offer your clients and their employees.

Product structure

Stable value funds are a relatively low-risk asset class that focuses on capital preservation and liquidity, while providing steady, positive returns to participants within qualified and nonqualified retirement plans.

The product can offer participants the liquidity and principal-protection features of money market products, but with the higher yields that are comparable with intermediate-term bonds.

This has been especially useful during the low-interest rate environment of recent years. Contracts can be issued by banks and insurance companies and are not subject to the Securities and Exchange Commission regulations.

Stable value funds are still able to ensure that participants receive book value on any transaction regardless of market conditions, allowing participants’ investments to safely earn yield.

Now that you’ve piqued your clients’ interest about stable value funds, further sell in the product by highlighting these three benefits that could help increase plan participants’ retirement readiness.

1. Guaranteed rates with low-risk investments

Depending on the carrier, a stable value fund’s crediting rate is typically contractually guaranteed and known to participants in advance. The rate is often locked into place every quarter or at least semiannually. Some insurers even guarantee that the crediting rate will never fall below 1 percent.

The promise that the crediting rate will never fall below a stated minimum can be an advantage for plan participants who have been hurt by financial instability in the marketplace and want a predictable return on investment in 2018. The guaranteed crediting rate can help garner more yield for participants who are able to invest in stable value funds longer-term, allowing their investments to gradually grow in a safe environment.

2. Daily liquidity regardless of marketplace changes

Stable value funds focus on capital preservation and liquidity that provide constant, guaranteed returns for participants. For clients that have employees nearing retirement, a conservative investment offering could help ensure participants’ savings are protected regardless of economic change.

For younger participants who may be paying off student loans, a secure, guaranteed investment option also can be the perfect fit to help set them on the road to retirement savings with little risk involved.

3. Higher yields with no additional volatility

Holding steady through marketplace volatility, stable value funds continue to be a strong go-to option to provide plan participants with a guaranteed yield through a low-risk investment vehicle. Stable value funds are backed by a high-quality, well-diversified portfolio of fixed-income options. These types of diversified investments allow the fund carrier to reduce the risk of market volatility and its impact on plan participants’ returns.

When it comes to defined contribution options, stable value funds can provide safety, liquidity and, most importantly, yield. Because of the product structure and promise of strong guarantees, it may be easy to see why stable value funds can be a retirement product worth considering.

Kent Bartell is the director of investment research, Standard Insurance Company (The Standard).

Instant Insights /

Stable value funds: the retirement product that&rsquo;s stood the test of time

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Stable value funds: the retirement product that’s stood the test of time