Blog: Stable Value: Not just for retirees

July 16, 2021

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Neena Saxena

Neena Saxena

Let's be honest. Thinking about investing and planning for our financial future isn't easy. There areso many investment vehicles and strategies that it's hard to know where to begin. Fortunately, whenyou boil it down to what investors really care about, it's pretty simple—we all want to protect ourhard-earned dollars, and we all want financial security when we retire.

That's why I love being a part of our stable value team. We are working every day to do just that—offer a world-class product that gives participants the opportunity to grow their assets but,importantly, also offers potential peace of mind as it aims to preserve their hard-earned savings incase of market downturns.

My colleague, Patricia Selim, recently wrote a great blog post about the role stable value can play forparticipants nearing retirement. It's true that these investors (those age 50 and older) use stablevalue more than younger investors, but I would extend that to say that our stable value funds canalso be an attractive solution for younger investors to include in their portfolios. Our data, whichlooks at all participants in Vanguard-recordkept plans, supports this.

participant chart

Focusing on emotional well-being

As investment professionals, we are trained to think of the attractiveness of an investment in termsof what we can quantify—returns, volatility, etc. What I have seen, however, is that evenaccumulators (despite having longer time horizons) often care more about avoiding losses andhaving peace of mind, rather than just returns.

The work we do in stable value reminds me of a good friend of mine. She is a well-to-doaccumulator who is not at all comfortable with investing. Despite having the ability to take on risk,she has very little appetite for it. In my former role, I connected her with an advisor for this veryreason. To this day she tells me how grateful she is to have a plan and peace of mind, as she knowswhat to expect from her finances.

Stable value investments as a part of a portfolio aim to provide stability with their history of relatively low volatility compared with bonds. They can help those accumulators in your plan who are lossaverse. That means they feel the pain of losses (even small losses) much more than they feel thejoy of gains. As someone who is somewhat loss averse, not only can I relate, but I see stable valueas a great option for such investors. More loss-averse accumulators may take comfort in the stabilitystable value can bring to a portion of their portfolio. After all, stable value is designed to stay at $1regardless of the volatility in the equity or bond markets, while potentially earning positive returnscomparable to short- to intermediate-term bond funds.

As the table below shows, stable value can offer a very attractive risk/return profile for participantstrying to balance their equity exposure. And the great thing about stable value is it can providereturns similar to bonds but with low volatility like you see in money markets. So, it can act as aballast to the portfolio during periods of market volatility.

participant chart

Sources: Vanguard; Bloomberg Barclays; and Lipper, a Thomson Reuters Company.Based on 10 years of returns and return volatility (standard deviation of rolling 12-month returns) as of December 31, 2020.

Retirement saving trust performance

Source: Vanguard as of June 30, 2021.

The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principalvalue will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may belower or higher than the performance data cited. See performance data current to the most recent month-end. The performance of anindex is not an exact representation of any particular investment, as you cannot invest directly in an index. There may be othermaterial differences between products that must be considered before investing.

In either case, stable value can help accumulators meet their investment goals just like it does forinvestors in or near retirement. And that inspires me, and my colleagues, to work harder every dayto deliver the best product the industry has to offer.

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.

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.


  • All investing is subject to risk, including the possible loss of the money you invest.
  • Investments in bonds are subject to interest rate, credit, and inflation risk.