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Stability and value for retirement sponsors and savers

Aruna Hobbs

Posted on June 11, 2018

Aruna Hobbs is Head of MassMutual’s Institutional Investments business.
Three Caucasian men of varying ages in office attire looking down at plans

As equity markets gyrate with volatility and interest rates steadily climb, MassMutual is seeing increased interest from sponsors of 401(k)s and other defined contribution retirement plans in an investment option that looks to combine competitive returns with stability: stable value funds.

Stable value funds, available only through employer-sponsored retirement plans as a capital preservation option, are typically composed of high-quality corporate or government bonds, with longer maturities than money market funds or similar fixed-income products. A life insurance company such as Massachusetts Mutual Life Insurance Co. (MassMutual) puts the “stable” in stable value funds by guaranteeing a minimum return backed by its financial strength and stability.

The increasing numbers of assets flowing into MassMutual’s stable value funds indicate that retirement plan savers too are noticing stable value funds for their balance of asset preservation and competitive returns as they are approaching or entering retirement.

According to the MassMutual Retirement Savings Risk Study1, nine in 10 pre-retirees and retirees “strongly agree” or “somewhat agree” that it is important to take steps to avoid major stock market losses right before retirement. One in two pre-retirees and one in three retirees are apprehensive about taking too much investment risk, the study finds.

As the population ages and more people approach and reach retirement age, stable value funds may become increasingly popular. The U.S. Census Bureau’s 2017 National Population Projections reports that all baby boomers will be older than age 65 by 2030, meaning that one in every five Americans will be retirement age.2 By 2035, the Census Bureau estimates, 78 million people will be age 65 or older compared to 76.4 million under age 18.

Those trends seem to be reflected in the growing popularity of stable value funds. In 2017, new sales of stable value funds hit $27.1 billion, an increase of 5 percent from 2016, according to the LIMRA Secure Retirement Institute3. Stable value assets total more than $800 billion as of Dec. 31, 2017, according to the Stable Value Investment Association. $Sales of stable value funds have been on the upswing since 2015 when interest rates started creeping up. Longer term, the products have been growing in popularity since 2010, LIMRA reports.

With more than $40 billion in stable value assets, as of March 31, 2018, MassMutual is a leading provider of stable value and registered investment funds for defined contribution plans. Many financial advisors and plan sponsors look to MassMutual’s stable value offerings because of investment acumen, financial strength, commitment, and expertise.4 Our enterprise level discipline of risk management permeates not only our stable value funds but also our family of MassMutual Funds, a multi-managed, diversified investment fund family.

Our range of stable value solutions can be customized to meet the needs of large individual plans, or commingled for smaller plans that may not otherwise have access to such solutions. They also cover the spectrum of general account, separate account, synthetic and other structures.

Stable value investments can also provide stability within an asset allocation structure. MassMutual is introducing stable value funds as part of two new series of target date funds (TDFs) in 2018. TDFs, with their long-term glide paths designed to preserve plan participant’s assets as they approach and enter retirement, may be the perfect vehicle for stable value funds.

Sponsors and advisors who are looking to create or enhance defined contribution plans may well look to incorporate stable value funds as an important individual component of their investment lineup. Whether equity markets are gyrating or stable, interest rates moving up or down, stable value funds provide value to retirement savers as they look to help achieve their long-term goals of a secure retirement.




1 MassMutual Retirement Savings Risk Study,

2 Older People Projected to Outnumber Children for First Time in U.S. History

March 13, 2018, United States Census Bureau,

3 Stable Value and Funding Agreement Products, Third and Fourth Quarters 2017, LIMRA Secure Retirement Institute,

4 Financial strength ratings are for Massachusetts Mutual Life Insurance Company (MassMutual) and its U.S.-domiciled life insurance subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company, as follows: A.M. Best Company, A++ (Superior); Fitch Ratings, AA+ (Very Strong); Moody’s Investors Service, Aa2 (Excellent); and Standard & Poor’s, AA+ (Very Strong). Ratings are as of 3/1/18 and are subject to change.