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
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. We can also help ensure that the underlying assets are still covered to help protect the $1 NAV because we have among the most issuers in the industry.
We offer several stable value options that may be right for your plan. In fact, Vanguard Retirement Savings Trust has outperformed its Morningstar peer group over one, three, five, and ten years. Also, the yields of our stable value funds have consistently outperformed money market peer group averages.
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 www.vanguard.com/performance. There may be other material differences between products that must be considered prior to investing.
Sources: Vanguard; Morningstar for stable value peer group; and Lipper, a Thomson Reuters company, for money market funds average. Returns as of 6/30/2021.
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.
* To make an apples-to-apples comparison, Vanguard Retirement Savings Master Trust includes all share classes and calculates returns the same way as Morningstar—gross of management fees, net of wrap/contract fees.
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.
FAQs
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.
What are stable value strategies? ›
Stable value funds invest in high-quality government and corporate bonds, short-term, and intermediate-term. They are no different from any bond fund, except they are insured. An insurance company or bank is contractually obligated to protect the fund's investors from any loss of capital or interest.
What is the average return on a stable value fund? ›
The 15-year annualized return for stable value funds as of March 2023 was 2.99%, according to the non-profit group Stable Value Investment Association (SVIA). The same figure for money market funds was 0.55%.
How often do stable value funds pay interest? ›
2.78% Interest is determined daily and credited to participant accounts at the end of each month, and/or when the entire balance from the Stable Value Fund is withdrawn or transferred.
Is it safe to keep all my money in Vanguard? ›
Rest easy knowing the cash in your Vanguard Cash Plus bank sweep is eligible for FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts. You can keep all your money in the bank sweep or diversify into 5 available Vanguard money market funds (each with a $3,000 minimum investment).
Which Vanguard fund has the highest return? ›
Top performing investment funds owned by Vanguard worldwide 2024, by one-year return. As of May 2024, the Vanguard Communication Services Index Fund provided the highest one-year return rate. The Vanguard Mega Cap Growth Index ranked second having a one-year return rate of 37.4 percent.
Is a stable value fund safe if the market crashes? ›
Sometimes, bonds lose value when stocks do – especially lower-quality bonds. We saw this recently during the coronavirus-inspired stock market crash in early 2020. In short, stable value funds are generally immune from interest rate risk and correlation to stocks during market panics; hence stable value.
Should I move my money to a stable fund? ›
1 – Attractive Long-Term Returns
Investors choose stable value because of the reliable long-term returns it provides for the portion of their savings that they don't want to expose to significant risk. Stable value funds allow investors to earn returns similar to short or intermediate bond funds with lower volatility.
What is comparable to a stable value fund? ›
Examples of “competing funds” include money market funds, high quality short term bond funds, or other principal preservation options.
Can you withdraw from a stable value fund? ›
Participant withdrawals and transfers are freely permitted daily according to plan provisions. Stable value funds from The Standard provide participants with full book value liquidity for benefit payments (death, disability or retirement) and transfers to other investment options.
This asset class is generally invested in short-term U.S. government bonds and high-quality corporate bonds during an average span of two to four years. Compared with money market funds, stable value funds typically pay higher interest rates with less volatility due to insurance guarantees.
Do stable value funds protect against inflation? ›
Stable value funds provide a reliable way to generate steady returns over time while minimizing volatility. Stable value funds have historically outperformed both money market funds and the rate of inflation, which has made them a go-to capital preservation option for defined contribution plan sponsors.
Does Vanguard have a value stock fund? ›
The Vanguard Value Index Fund focuses on large-cap stocks that produce value instead of growth.
What happened to Vanguard US value fund? ›
Vanguard U.S. Value Fund merger
Shareholders of the $1.1 billion Vanguard U.S. Value Fund approved a proposal to merge the fund into the $96.9 billion Vanguard Value Index Fund.
Does Vanguard have a balanced fund? ›
Overview. Objective: Balanced Index Fund seeks-with 60% of its assets-to track the investment performance of a benchmark index that measures the investment return of the overall U.S. stock market. With 40% of its assets, the fund seeks to track the investment performance of a broad, market-weighted bond index.
Is Vanguard financially stable? ›
About Vanguard
Vanguard's mission is to "take a stand for all investors, to treat them fairly, and to give them the best chance for investment success."6 It prides itself on its stability, transparency, low costs, and risk management.
