Prudential’s Stable Value products are designed to perform through all interest rate cycles. In times of rising interest rates, coupled with market uncertainty and volatility, our Stable Value products protect participants from this market volatility. They provide for smooth, consistent crediting rates over time, which is in line with Stable Value’s value proposition.
Prudential is able to deliver on these benefits based on our long tradition and strong commitment to the Stable Value market. Prudential is a pioneer with over 40 years’ experience and as of March 31, 2017 we have $122.5 billion in Stable Value account values. We are ranked first in Stable Value assets1 and have a 15% market share.2
Prudential’s Stable Value products deliver key benefits in rising rate environments:
- Provides peace of mind for participants
- Guarantees of both principal and accumulated earnings. Unlike bond funds, participant account balances do not fluctuate with the change in interest rates
- Smooth consistent crediting rates over time—providing participants with protection from market volatility
- Stable Value products exhibit low correlation to other asset classes and can therefore increase diversification and reduce volatility within a retirement portfolio
- Our Stable Value portfolios are designed to provide safety through all interest rate cycles
- Our portfolios consist of highly diversified, conservative, high-quality, intermediate duration fixed income investment portfolios
- Prudential is a leader in Stable Value as well as asset management with strong credit analysis, quantitative research and risk-management capabilities
- Prudential product guarantees are made through highly rated Prudential Financial companies
Provides book value liquidity for participant activity, separate from market value fluctuations
- Allows for daily participant transactions and benefit-responsive payments at book value (principal plus accumulated interest) during a rising rate environment
- Book value liquidity is the ability to transact without realizing any market value losses as you may have with a bond fund
Crediting Rate Performance
Participants enjoy competitive long term returns
- Over the long term, Stable Value products have outpaced other products such as money market funds or intermediate-term bond funds3, 4
- Crediting rates trail changes in more volatile interest rate markets, providing consistent returns over time
- Stable Value products’ crediting rates are guaranteed not to fall below a contractual floor, unlike bond funds which can have negative returns
Participants appreciate the certainty and peace of mind of a guaranteed crediting rate and the knowledge that their account balances do not fluctuate due to changes in the market value of the portfolios that support them.
1P&I Money Manager Survey, May 2017. Data as of 12/31/2016.
2Estimated market share using market size as reported by Stable Value Investment Association 1Q2017 Stable Value Quarterly Characteristics Survey.
3Dr. David Babbel and Dr. Miguel A. Herce, “Stable Value Funds: Performance to Date,” The Wharton School, January 2011. Additional summarization provided by Dr. Babbel and Dr. Herce, February 2011.
4Money market funds allow redemptions of any amount, payable in 7 days or less. Money market funds are diversified as required by the Investment Company Act of 1940. Stable Value generally allows withdrawals at book value only for benefit-responsive withdrawals.
In providing this information Prudential Retirement is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity. Prudential Retirement may benefit from advisory and other fees paid to it or its affiliates for managing, selling, or settling of the Prudential mutual funds and other investment products or securities offered by Prudential Retirement or its affiliates. Investment vehicles sponsored or managed by a Prudential Retirement affiliate generate more revenue for the Prudential enterprise than non-proprietary investment vehicles. Prudential Retirement’s sales personnel generally receive greater compensation if plan assets are invested in proprietary investment vehicles. Prudential Retirement may benefit directly from the difference between investment earnings of Prudential Retirement’s Stable Value funds and the amount credited to deposits in those funds. Prudential Retirement may also benefit from broker-dealer or other entities’ co-sponsorship of Prudential conferences.
Insurance products are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or The Prudential Insurance Company of America (PICA), Newark, NJ. Both are Prudential Financial companies. Each company is solely responsible for its financial condition and contractual obligations.
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