What is Stable Value?

Stable value investment options ("funds") are lower-risk strategies, as compared to equity and longer-duration fixed income options, that are available in tax-qualified retirement plans. The objective of stable value funds is generally to provide preservation of principal with stability and consistency of returns.

To achieve these objectives, stable value funds invest primarily in

• High-quality, fixed income securities issued by the U.S. government and its agencies
• Investment-grade debt securities issued by corporations
• Mortgage-backed securities
• Asset-backed securities.

The funds then enter into maintenance agreements (wrap contracts) with one or more financial institutions for the purpose of maintaining a stable or positive value. The wrap contract is designed to smooth performance and reduces the impact of ups and downs in the market

Who invests in stable value?
Stable value funds are available for investors in tax-qualified retirement plans (e.g., 401(k) plans and government 457 plans). Stable value funds typically are appropriate for investors who desire low volatility, stable principal value and consistent returns on a component of their retirement savings.

Stable value funds are long-term retirement investments. Used as a part of a diversified portfolio, they can help to offset volatility in other areas of the market. Stable value funds are not suitable for short-term use.

Morley Financial provides two investment choices in which to invest in stable value funds:

• Pooled Funds
• Separate Accounts