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Our stable value funds seek to preserve capital and provide stability of principal for retirement plan participants. They're managed to be an attractive alternative to other capital preservation vehicles, earning current income that exceeds money market rates over the long term.
Offering a unique combination of benefits—including insurance guarantees—stable value funds can play an important role in a retirement plan investment lineup. Representing more than $936 billion of participant assets as of December 31, 2022,1 stable value funds are a defined contribution (DC) plan staple.
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of DC plans offer stable value funds2
of in-plan assets are invested in stable value funds3
of DC plan assets are held in stable value funds3
Combining the cash flow potential of intermediate duration bonds and the security of wrap contracts, stable value funds have historically generated higher returns with lower risk than other short-term/cash alternatives.
Source: Stable value is represented by the Morningstar Collective Investment Trust (CIT) Stable Value (SV) Index, part of the Morningstar SV CIT universe, which is an equal-weighted total return average across all participating funds and represents approximately 75% of the SV pooled funds available to the marketplace. Money market is represented by the FTSE 3-Month U.S. Treasury Bill Index, which tracks the performance of the most recent three-month U.S. Treasury bill issues. Ultra-short bonds are represented by the Bloomberg U.S. Short Treasury 9–12 Month Index, which tracks the performance of U.S. Treasury bills, notes, and bonds with up to, but not including, 12 months to maturity. Short-term bonds are represented by the Bloomberg U.S. 1-3 Year Treasury Bond Index, which tracks the performance of the U.S. government bond market and includes public obligations of the U.S. Treasury with a maturity between one and three years. Intermediate bonds are represented by the Bloomberg U.S. Aggregate Bond Index, which tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt markets. It is not possible to invest directly in an index. Standard deviation is a statistical measure of the historic volatility of a portfolio. It measures the fluctuation of a fund's periodic returns from the mean or average. The larger the deviation, the larger the standard deviation and the higher the risk. Past performance does not guarantee future results.
© 2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor any of its content providers are responsible for any damages or losses arising from any use of this information.
Source: Morningstar Direct, 12/31/22. The Bloomberg U.S. Intermediate Government/Credit Index tracks the performance of intermediate-term U.S. government bonds, U.S. corporate bonds, and Yankee bonds. The Morningstar Collective Investment Trust (CIT) Stable Value (SV) Index is part of the Morningstar SV CIT Universe, which is an equal-weighted total return average across all participating funds and represents approximately 75% of the SV pooled funds available to the marketplace. The Morningstar US Money Market Index tracks the performance of U.S. securities and targets 97% market capitalization coverage of the investable universe. It is not possible to invest directly in an index. Past performance does not guarantee future results.
© 2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor any of its content providers are responsible for any damages or losses arising from any use of this information.
Over the past 14 years, monthly returns for stable value strategies have continuously exceeded those for money market funds. And although intermediate duration bonds are a key stable value component, stable value strategies have also smoothed out the turbulence of holding that class of assets.
In a period of high inflation and climbing interest rates, the structure, insurance guarantees, and active management of a stable value strategy can provide important advantages for DC plan participants and sponsors.
Source: CPI data, U.S. Bureau of Labor Statistics, 12/31/22; GDP data, U.S. Bureau of Economic Analysis, 12/31/22. Fed refers to the U.S. Federal Reserve. The Morningstar Collective Investment Trust (CIT) Stable Value (SV) Index is part of the Morningstar SV CIT Universe, which is an equal-weighted total return average across all participating funds and represents approximately 75% of the SV pooled funds available to the marketplace. It is not possible to invest directly in an index.
Tax-exempt, pooled investment vehicles are maintained by a bank or trust company, and they’re available only to ERISA-qualified retirement accounts. They're exempt from many of the regulatory requirements that drive mutual fund expenses, generally giving them a fee advantage over mutual funds.4 Funds remain the property of the plans.
John Hancock’s pooled stable value funds are available to plans on both third-party and our own recordkeeping platforms.
Funds are managed by an insurance company to provide specified tax-qualified retirement benefits for a plan’s participants. The contract defines the benefit payment options and amounts the contract holder has purchased for each participant, which are payable from the insurer’s general account.
Our general account stable value fund is available exclusively to plans on John Hancock’s recordkeeping platform.
4 A collective investment trust (CIT) is a tax-exempt pooled investment vehicle maintained by a bank or trust company for certain qualified retirement plan clients. CITs are overseen by state or federal bank regulators and subject to the federal laws governing retirement plan fiduciaries. A mutual fund is a publicly traded pooled investment fund that are offered through registered investment companies overseen by the U.S. Securities and Exchange Commission. CITs are not subject to the regulatory, operational, reporting, and disclosure requirements of mutual funds. Administration, distribution, and marketing costs are generally lower than those for mutual funds as well.
|
Typical pooled or commingled stable value funds |
Typical general account stable value funds |
Investment objective |
Guarantee of principal and interest with liquidity and a stable return |
Guarantee of principal and interest with liquidity and a stable return |
Structure |
Collective investment trust or fund |
Insurance group annuity contract |
Guarantor/insurer |
Guarantees are provided by internal or external insurance companies or banks Typically referred to as wrap providers |
The insurance company issuing the group annuity contract and the associated guarantees |
Plan asset ownership |
Assets remain owned by the plan |
The insurance company owns the plan assets |
Underlying investments |
Transparent to the plan and typically consist of a diversified portfolio of high-quality fixed-income securities, including government, Treasury, mortgage, and/or corporate securities |
Plan assets are invested directly in the insurers general account; the insurer has discretion over the investment allocation and typically invests in a broad range of fixed-income and non-fixed-income securities |
Crediting rate (CR) formula |
Industry standard formula that factors in the yield, duration, and credit quality of the underlying investments and associated expenses with managing the portfolio |
Factors include, but are not limited to, the current interest-rate environment, the portfolio return from the general account, and the associated expenses for offering the fund |
CR reset period |
Typically, rates reset on a daily, monthly, or quarterly basis |
Typically, rates reset on a quarterly, semiannual, or annual basis |
Avg. target duration |
Typically 2 to 4 years |
Typically 3 to 8 years |
Minimum CR |
Typically not stated; however, wrap contract CRs cannot fall below 0.00% |
Minimum guarantee rates vary by contract but are typically between 1%–2% |
Fee disclosure |
Fees are stated and fully transparent to participants |
Fees are less transparent as certain or all fees are taken out of the spread portion of the fund |
Participant-level liquidity |
Typically benefit responsive, certain funds have caps on participant withdrawals |
Typically benefit responsive, certain funds have caps on participant withdrawals |
Proper and diligent investment selection and oversight are crucial to successful stable value management. John Hancock’s process features:
Each strategy is served by a dedicated research analyst. Together, they bring over 60 years’ experience to the role.
Our oversight includes quarterly reviews of portfolio performance, positioning, and characteristics—and annual due diligence meetings with each manager.
Our process includes multiple governance and oversight committees with voting members from our senior leadership team.
As skilled and experienced specialists in stable value and other capital preservation strategies, we partner closely with financial professionals and consultants to optimize this crucial aspect of the DC plan investment mix.
David is responsible for the management of over $3.5 billion of stable value assets through John Hancock Stable Value Fund and John Hancock Stable Value Guaranteed Income Fund, offered to full-service 401(k) plans, and John Hancock Fixed Income Fund, offered to John Hancock employees through their own 401(k) plan. He's been in the stable value industry since 2012 and joined John Hancock in 2003. David is a voting member of the Stable Value Investment Association as well as the executive vice-president of John Hancock Trust Company and is responsible for our CIT funds as part of his role as head of institutional and retirement investment products. Prior to 2012, David managed strategic enterprise initiatives in the United States, Canada, and Asia for John Hancock and Manulife and was responsible for high-net-worth clients and financial advisors for our variable annuity business. He earned a B.A. in Political Science from Muhlenberg College.
Michael is responsible for positioning, promoting, and supporting John Hancock Stable Value Funds. His responsibilities also include performance monitoring, product training and sales support, oversight of the day-to-day operations of the funds, and representing the Stable Value Funds at cross-functional working group meetings. Michael joined John Hancock in 2006, and he earned an M.B.A. from Babson College and a B.S. in Marketing from Franklin Pierce University.
Jeff is responsible for managing and overseeing all aspects of the day-to-day operational items across John Hancock stable value funds. His responsibilities include calculating performance and fund metrics, managing cash flows, managing audit requirements, and supporting the head of stable value with any ad hoc requests. Jeff joined John Hancock in 2010, and he earned a B.S. in Accounting and Finance from the University of New Hampshire.
Kent is responsible for overseeing, project managing, and coordinating various fund events, including fund launches, mergers, liquidations, and share class additions/mergers across multiple investment platforms. He's been in the asset management industry since 2010 and joined John Hancock in 2014. Kent earned a B.A. in Business Administration from the Peter T. Paul College of Business and Economics and he holds the Chartered Financial Analyst designation.
Warren is responsible for the day-to-day operational items for John Hancock Stable Value Fund and Fixed Income Fund. His responsibilities include managing cash flows, tracking and updating performance and managing the stable value team inbox. Prior to his role on the stable value team, he was an internal wholesaler with John Hancock U.S. Retirement. Warren graduated from Providence College in 2017 with a B.S. in Marketing. He has been with John Hancock for 6 years.
May 4, 2023
December 21, 2022
April 10, 2024
Financial professionals and plan sponsors: Talk to an investment-only specialist about the role stable value funds play in a plan investment lineup, how they measure up to other capital preservation options, and our approach.
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CITs
John Hancock CITs are not registered investment companies and are not subject to the same registration requirements as a mutual fund under the Investment Company Act of 1940 and its units are not registered under the Securities Act of 1933 or the laws of any other jurisdiction. A CIT is a pooled investment vehicle that is maintained by a bank or trust company for the collective investment of qualified retirement plans. CITs are not publicly offered and may be purchased only by qualified retirement plans
John Hancock CITs are maintained by John Hancock Trust Company, a New Hampshire nondepository trust company, except John Hancock Stable Value Fund Collective Investment Trust, which is maintained by Global Trust Company, the Fund’s trustee, a non-depository trust company organized under the laws of the State of Maine.
This is not an offer to sell units of the trust, and the trust is not soliciting offers to buy units of the trust, at any time in any jurisdiction in which the offer or sale is not permitted. Units of the trust are only offered to eligible qualified employee benefit plans in the sole discretion of the trustee. Descriptions of the trust should be read together with the declaration of trust, the participation agreement, and the fund declarations, copies of which are available to qualified investors on request from John Hancock Trust Company or Global Trust Company (John Hancock Stable Value Fund Collective Investment Trust).
John Hancock Trust Company
197 Clarendon Street, Boston, MA 02116 800-225-6020
Global Trust Company
2 Gill Street #2600, Woburn, MA 01801 781-970-5034
John Hancock Retirement Plan Services LLC offers administrative and/or recordkeeping services to sponsors and administrators of retirement plans. John Hancock Trust Company LLC provides trust and custodial services to such plans. Group annuity contracts and recordkeeping agreements are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA (not licensed in NY), and John Hancock Life Insurance Company of New York, Valhalla, NY. Product features and availability may differ by state. Securities are offered through John Hancock Distributors LLC, member FINRA, SIPC.
John Hancock Investment Management Distributors LLC is the principal underwriter and wholesale distribution broker-dealer for the John Hancock mutual funds, member FINRA, SIPC.
