A strategy for stability, liquidity, and income
Retirement plan participants invest in stable value funds for principal stability and attractive income opportunities.
Putnam Stable Value Fund pursues income and principal protection, and includes investments in guaranteed investment contracts (GICs).
The fund seeks to maintain the stability of a money market fund while offering returns similar to those of intermediate-term bonds.
Stable value funds are among the most commonly used funds in workplace retirement plans, offering a combination of diversification and liquidity.
Putnam has deep professional expertise in stable value strategies, including 25 years of experience and over
$8 billion in assets.
Stable value funds have outperformed money market funds with less volatility
Stable value funds are attractive capital preservation options in many plans because they seek stable performance like a money market fund while also investing in the higher return potential of intermediate-term bonds. As a result, the stable value category has historical returns that generally outpace money market funds.
In the chart, 3-month U.S. T-bill returns are used to represent approximate money market returns. Note, SEC reforms since 2010 have required money market funds to reduce portfolio weighted average maturity from 90 days to 60 days.
Learn about Putnam's stable value capabilities:
- Read Why choose Putnam for stable value.
- Find answers to frequently asked questions.
- Learn why Putnam believes GICs enhance fund stability.
What is a traditional GIC?
A traditional guaranteed investment contract (GIC) is an investment contract issued by a AA or A rated insurance company or its affiliate. The buyer, or contractholder, pays the insurance company/issuer for the contract, which then invests those proceeds in its general account. The interest rate — known as the crediting rate in the stable value context — may be fixed or floating and is based on the assets available for investment by the issuer as well as that issuer's assessment of the risk associated with the plan(s) and the specific investment manager purchasing the contract. The "guaranteed" portion of the name indicates that principal and interest are guaranteed by the insurance company. In other words, the guarantee is as good as the credit risk of the issuer. Stable value funds using GICs typically develop a diversified exposure employing a number of issuers.Download PDF