The benefits and role of stable value in your fund lineup

Vanguard Retirement Savings Trust

More about stable value

The goal of stable value funds in a portfolio is capital preservation. They invest, directly or indirectly, in high-quality, short- to intermediate-term fixed income investments, and are distinguished from bond funds by maintaining a constant $1 share price net asset value (NAV).

The stable value funds hold insurance contracts to wrap the underlying fixed income strategies. This allows the stable value fund to use book-value accounting, permitting the fund to maintain the stable share price.

We believe in the role of stable value as a conservative investment option, so we've chosen not to go down in quality. We think it is a great value proposition to potentially deliver stellar returns to participants while retaining high quality.

Patricia Selim

Head of Stable Value Investments

Raising the bar when it comes to stable value

In two short videos, Patricia Selim and Colleen Jaconetti share the benefits of Vanguard stable value funds and how they stack up against money market funds.

Patricia Selim Colleen Jaconetti

Videos produced in collaboration with CNBC.

Why Vanguard stable value?

Vanguard has been managing stable value since 1984. In that time, our stable value products have had solid performance thanks to our robust process of allocation and selection across highly diversified asset classes in the underlying strategies. And with 60% more issuers than the Hueler average, we help ensure that the underlying assets are still covered to help protect the $1 NAV.

We offer several stable value options that may be right for your plan. In fact, Vanguard Retirement Savings Trust (Figure 1) has had top-quartile performance versus Hueler over one, three, five, and ten years. Also, stable value funds have provided consistently higher yields than money market peer group averages. (Figure 2)

Figure 1

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† Sources: Vanguard, and Hueler Analytics Stable Value Pooled Fund Universe. Hueler's data is copyright-protected and not for reproduction or redistribution. Retirement Savings Trust and Hueler average returns are gross of management fees and net of contract fees. Data as of December 31, 2020.

Note: The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Figure 2

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Sources: Vanguard and Morningstar data as of December 31, 2020.

* Note: To make an apples-to-apples comparison, Vanguard Retirement Savings Master Trust includes all share classes and calculates returns the same way as Hueler—gross of management fees, net of wrap/contract fees.

Funds included in the money market average represent all funds in the Morningstar money market fund category. Results will vary for other time periods. Only funds with a minimum one-, three-, five-, or ten-year history, respectively, were included in the comparison.

Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.

There may be other material differences between products that must be considered prior to investing.

For more information on the differences between stable value and money market funds, please see "Stable value: A safe harbor."

Need more information on Vanguard stable value?

Vanguard offers several stable value products that may be right for you and your capital preservation strategies. If you’d like more information about designing a retiree-friendly investment lineup for your 401(k) plan, our experts can help.

Call us at 800-523-1036 to talk to one of our experts today or send us an email and someone will be in touch.

A stable value investment is neither insured nor guaranteed by the U.S. government. There is no assurance that the investment will be able to maintain a stable net asset value, and it is possible to lose money in such an investment.

Vanguard Retirement Savings Trust is not a mutual fund. It is a collective trust available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.