What Is a Stable Value Fund?

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A stable value fund is a low-risk investment that is similar to a money market fund. It invests in wrap contracts that offer a guaranteed return.

Key Takeaways

  • A stable value fund (SVF) is a conservative fund investment option. It's only for those in defined contribution plans, such as 401(k)s.
  • SVFs retain the value of your initial investment, no matter what the stock and bond markets are doing.
  • Stable value funds invest in fixed-income securities and wrap contracts offered by banks and insurance companies.

Definition and Example of a Stable Value Fund

A stable value fund is a conservative fund investment option, or one that is focused on the preservation of capital. That means it retains the value of your cash, no matter what the stock and bond markets are doing. The risk is low, but the return you get is low as well. It's only available to participants in defined contribution plans, such as 401(k)s.

Alternate names: Stable value funds are also called:

  • Capital accumulation funds
  • Principal protection
  • Guaranteed funds
  • Preservation funds
  • Guaranteed investment contracts (GICs)
  • Group annuity contracts

Acronym: SVF

For example, a business or government agency might offer a stable value fund as one of the options where employees can invest the money from a 401(k) or 403(b) plan. It wouldn't offer the employees much growth for their retirement funds, but it would ensure that none of the money they invest is lost.

A stable value fund is similar to a money market fund but offers slightly higher yields than a money market fund without too much added risk.


In 2018, more than $800 billion was invested in stable value assets. About three-fourths of defined contribution plans offered a stable value option.

How Do Stable Value Funds Work?

Stable value funds invest in fixed-income securities and wrap contracts offered by banks and insurance companies. Wrap contracts often guarantee a certain return, even if the underlying investments decline in value.

To support that guarantee, a wrap contract relies on both the value of the associated assets and the financial backing of the wrap issuer. Both banks and insurance companies can issue wrap contracts. That means that your money should never be worth less than your initial investment in the fund. The company offering the wrap contract guarantees a certain return, no matter what happens to the economy at large. If, for some reason, the fund does lose value, it is the responsibility of the wrap issuer to make the funds whole.


Be wary of funds charging 1% or more. These fees can eat into the low returns that a stable value fund provides.

Stable value funds come with risks, like any investment. With SVFs, risks could involve the company running the fund or offering the wrap contract, or a company that is substantially invested in the fund.

Bankruptcy, credit quality, or other challenges to financial solvency for any of these participants can impact how safe your investment is.

It's possible to lose money in stable value funds, but that has happened only a few times. In 2009, an SVF in a deferred-compensation plan for workers at Chrysler paid only 89 cents on the dollar when it was liquidated before the carmaker could begin bankruptcy proceedings.

In December 2008, an SVF managed by Invesco for Lehman Brothers workers fell by 1.7% in value. That was after many former workers of the bankrupt Wall Street firm withdrew their money. To cover the withdrawals, the fund had to quickly sell bonds at a loss. The fund was still able to return about 2% for all of 2008.

Some SVFs managed by State Street Corp. would have had losses in 2008 if the company hadn't contributed more than $610 million to make the funds whole.

Types of Stable Value Funds

Stable value funds can take a few different forms. The differences among them are the source and nature of the underlying assets.

Separately Managed Account

This type of plan is offered by an insurance company. It is backed by assets in a segregated account held by the insurance company. If needed, it is also backed by the insurer’s general account assets. The assets in the separate account are owned by the insurance company. They are held only for the benefit of the plan participants.

Commingled Fund

This type of fund is also known as a "pooled fund." It is offered by a bank or other financial institution. It combines assets from a variety of unaffiliated retirement plans. so it can help smaller plans gain economies of scale.

Guaranteed Investment Contract (GIC)

A GIC is issued by an insurance company. It pays a certain rate of return over a given length of time. This kind of contract may be backed by the issuer’s general account assets. It also could be backed by assets held in a separate account. In either case, the insurance company owns the assets. The obligation to those in the plan is backed by the full financial strength and credit of the company that issued it.

Synthetic GIC

This type of contract is similar to a regular GIC, but the assets are held in the name of the retirement plan or a trustee of the plan.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IN.gov. "Stable Value Fund."

  2. MDPI. "Stable Value Funds Performance."

  3. Pennsylvania State Employees' Retirement System. "Stable Value Fund."

  4. Stable Value Investment Association. "What Are GICs and Wraps?"

  5. Reuters. "Chrysler Stable Value Fund Loses Money-WSJ."

  6. MDPI. "Stable Value Funds Performance," Footnote 30.

  7. Stable Value Investment Association. "Separate Account GIC."

  8. Stable Value Investment Association. "Pooled Fund."

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