ICMA-RC Investment Expert Shares Personal Outlook for Stable Value on Asset TV
October 31, 2016
Karen Chong-Wulff, who manages a $10.9 billion stable value fund (as of Sept. 30, 2016) for ICMA-RC, recently participated in an Asset TV Masterclass interview that explored the current challenges and opportunities ahead for stable value investments. In an uncertain interest rate environment, Karen Chong-Wulff, who is Managing Vice President, Fixed Income in ICMA-RC's Investments Division, explained her reasons for optimism about the $801 billion stable value market, as of June 30, 2016.
Discussing ICMA-RC’s emphasis on stable value, Chong-Wulff observed, "Our firm has always believed in stable value. Our clients' defined contribution plans don’t have a huge percentage of assets allocated to money market funds because we educate them about the choices. Our plan sponsor clients, and their participants, get it: stable value offers liquidity, higher returns and about the same market volatility as money market funds."
Two stubborn challenges facing the stable value industry and its investors may soon be resolved, Chong-Wulff reasons. "There is the low interest rate environment. But it has been low for a long time and I think it’s gradually going to go up. Stable value is designed to produce well when interest rates go up — to rise with interest rates. Second, as more retirement investments move from mutual funds to collective investment trusts (CITs), I expect there will be growth opportunities for stable value. As CITs, they can be part of a target date investment and offered as qualified default investment alternatives in a retirement plan."
To watch more of Karen Chong-Wulff discussing stable value on the Asset TV Masterclass, go to www.icmarc.org/AssetTV