Why Vanguard does not offer a stable value fund?

[Spanky]

Does anyone know the reason that Vanguard does not offer any stable value fund for their employer-sponsored retirement accounts?

It seems odd since most (2/3) offer them.

 

[2B]

They have several money market funds. How stable a value do you want?

If you're in Vanguard brokerage there are CD's available.

 

[ats5g]

Does anyone know the reason that Vanguard does not offer any stable value fund for their employer-sponsored retirement accounts?

It seems odd since most (2/3) offer them.

Our company has their 401(k) through Vanguard, and they do offer a stable value fund: Vanguard Retirement Savings Trust:

Vanguard® Retirement Savings Trust seeks stability of principal and a high level of current income consistent with a 2-3 year average maturity. The trust is a tax-exempt collective trust invested primarily in investment contracts issued by insurance companies and commercial banks, and similar types of fixed-principal investments. The trust intends to maintain a constant net asset value of $1.00 per share. Investments in Vanguard Retirement Savings Trust are limited to participant-directed defined contribution plans and, with Vanguard’s approval, other qualified pension plans.

Strategy and Policy

Investment strategy

The fund invests primarily in investment contracts issued by insurance companies, banks or other financial institutions, including investment contracts backed by high-quality fixed income securities.

The fund seeks to achieve its objective by diversifying among high credit-quality investments and investment contracts which are structured to smooth market gains and losses over time.

Investment policy

* The trust invests in a combination of synthetic contracts (backed primarily by Vanguard® bond funds), traditional investment contracts backed by major insurance providers, and bank contracts.
* The trust’s strict credit guidelines require that traditional investment contracts be rated at least AA.
* The trust will maintain an average maturity between 2-3 years.

see Vanguard's Commingled Trusts.

- Alec

 

[Texas Proud]

The stable value funds are mostly issued by insurance companies...

The difference with MM is that it is a variable rate... all the stable value funds I saw reset their rates each year.... you KNOW the rate you are getting... like a one year CD, but at a higher rate...

Vanguard does not offer this because they don't take 'risks'.. this is what banks and insurance companies do....

 

[mickeyd]

I do not believe that Stable Value funds are available anywhere except in employer sponsored retirement plans like 401(k). I don't recall the reason why this is so, but I read it someplace about a year ago and it made sense at that time....so I must be correct

 

[Spanky]

My mistake. Vanguard does offer a stable value fund in my company 401K plan. They call it the Interest Income Fund that provides a slightly higher interest rate than that of a money market fund at about the same risk.

 

[sgeeeee]

My mistake. Vanguard does offer a stable value fund in my company 401K plan. They call it the Interest Income Fund that provides a slightly higher interest rate than that of a money market fund at about the same risk.

Spanky,

I don't recall why, but I was thinking that you were fairly young (at least compared to an old phart like me). It seems unusual that someone with your investment knowledge and investment horizon would be considering a stable value fund for their 401(k). Am I wrong about your situation, or are you making a fairly conservative investment move?

 

[Spanky]

Spanky,

I don't recall why, but I was thinking that you were fairly young (at least compared to an old phart like me). It seems unusual that someone with your investment knowledge and investment horizon would be considering a stable value fund for their 401(k). Am I wrong about your situation, or are you making a fairly conservative investment move?

Thanks for the complement - I am not young and am getting ready for ER in about 5 years. I like to keep a small portion (say 5%) of my portfolio into a stable value fund for switching in-and-out of the market (may not be wise though).