Stable Value Assets Continue to Grow as Stocks Tumble
By Randy Myers
Stable value funds appear to be weathering the financial crisis well, judging by the experience of one manager of defined contribution plans, the U.S. arm of Dutch financial services firm ING Group N.V. Speaking at the Stable Value Investment Association’s 2008 Fall Forum in Washington, D.C., in early October, Anthony Camp, vice president of ING’s Stable Value Product Group, said stable value assets in the defined contribution plans of ING clients have continued to rise moderately this year even as variable assets—primarily stock and bond funds—have declined. Similarly, data compiled by the research and consulting organization LIMRA show a sharp increase since the third quarter of 2007 in new and renewal sales of stable value products at 21 companies that market stable value investments. “We’re on track to have our biggest year ever in terms of contributions to stable value,” Camp said.
All this would appear to indicate that once stock prices started tumbling at the end of last year, investors began to appreciate more than ever the investment and withdrawal guarantees offered by stable value funds. Or, as Camp put it, “Not one dollar of the $2 trillion reported to have been lost in retirement savings plans this year was in stable value funds.”
The numbers cited by Camp also align with data compiled by Hewitt Associates LLC. Stable value assets, including Guaranteed Investment Contracts, accounted for 27.2 percent of the total assets in the Hewitt 401(k) Index at the end of September, up from 20.2 percent a year earlier. The index tracks the daily asset transfer activity of nearly 1.5 million 401(k) plan participants at large U.S. companies. -30-