Skip to main content

You are here

Advertisement

Stable Value Quarterly Update from Blue Prairie Group

Stable value is one of the most popular investment choices in DC plans — and one of the least understood. Some advisors use this lack of understanding by plan sponsors and their competitors as a differentiator and prospecting strategy.

The Blue Prairie Group, a DC-focused advisory firm which started tracking and publishing their stable value reports years ago, provides quarterly updates as well as a succinct comparison of different types of products and questions advisors should be asking their providers. Their recently completed Q4 2012 report includes results from 18 stable value providers that manage $250 billion. Highlights include:

• Returns ranged from 1.28% to 3.10%, compared with 1.31% to 4.30% over the past three years.
• Depressed interest rates and rallying equity markets drove down demand and prices.
• More money moved into Treasuries from mortgaged-backed securities.
• Fees ranged from 15 to 75 BPs (segmented primarily by plan size) with wrap fees of 15 to 25 BPs included.

Overall trends included:

• Traditional providers — especially banks — are exiting or reducing capacity.
• Reduced capacity is forcing smaller providers to shut down or execute soft closes.
• Insurance companies are increasing their market share.
• Investment guidelines have tightened.

An executive summary of the report is available here.

Advertisement