Galliard Stable Value Fund
Galliard Stable Value Fund

Galliard Stable Value Fund – galliard stable value fund

What is Galliard Stable Value Fund ?

Galliard Stable Value Fund is an investment product typically offered within retirement plans like a 401(k). It’s designed to provide capital preservation and consistent, steady returns.

Stable value funds like Galliard’s generally invest in high-quality, short-to-intermediate-term fixed income securities, including U.S. government and corporate bonds, mortgage-backed securities, and other similar investments. The specific portfolio of the Galliard Stable Value Fund might differ slightly based on the fund’s strategy and investment objective, but the overall goal is the preservation of capital and modest income.

Stable value funds are typically used as a low-risk investment option within a retirement portfolio, ideal for investors seeking stability and less market volatility.

As with all investments, stable value funds carry some level of risk, although generally lower than many other investment types. For example, there’s the risk that the fund’s returns might not keep up with inflation over time. Also, because these funds often come with insurance contracts to smooth out returns, there’s a counterparty risk related to the financial strength of the insurance provider.

Stable Value Philosophy

Stable value funds follow a conservative investment philosophy, focusing on capital preservation and consistent, modest returns. Their design provides a low-risk option for investors who want to reduce exposure to market volatility. Here’s a detailed breakdown of the philosophy:

  • Capital Preservation: The primary goal of a stable value fund is to preserve the principal amount invested. This means that the fund aims to avoid losses that could result from market fluctuations or volatility.
  • Consistent, Steady Returns: Stable value funds aim to provide modest but steady positive returns, regardless of the market condition. This makes them suitable for investors looking for predictable growth, especially those who are risk-averse or nearing retirement.
  • Income Generation: Stable value funds invest in fixed-income securities, like bonds, which provide regular interest payments. This can help generate income for investors over time.
  • Low Volatility: Because they invest in high-quality, short-to-intermediate-term fixed income securities, stable value funds often experience less price fluctuation compared to more volatile assets, like stocks.
  • Liquidity: Stable value funds are designed to allow investors to make withdrawals or transfers at book value, which is crucial for participants who need liquidity for loans or hardship withdrawals.
  • Insurance Protection: Stable value funds use insurance contracts, often called “wrap contracts,” from banks or insurance companies to smooth out returns and protect against the impact of interest rate movements.
  • Inflation Hedge: While stable value funds may not offer high returns, they often aim to exceed the returns of money market funds and keep pace with inflation. This helps preserve the purchasing power of investor’s money.
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It’s important to note that while stable value funds follow a conservative investment approach, they are not entirely without risk. For instance, they are subject to the credit risk of the underlying investments and the financial strength of the wrap contract providers. Furthermore, their returns might not keep up with inflation over the long term. As with any investment, investors should carefully consider their personal financial situation, risk tolerance, and investment goals before investing in a stable value fund.

Stable Value Strategies

Stable value strategies generally involve a mix of investment in high-quality fixed income securities, use of insurance contracts or “wraps”, and active management of the portfolio to balance risk and return. Here are some of the key strategies:

  • Investment in High-Quality Fixed Income Securities: The core of a stable value fund is typically composed of high-quality, short-to-intermediate-term fixed income securities, such as U.S. government securities, corporate bonds, and mortgage-backed securities.
  • Diversification: Diversification is crucial in stable value funds to mitigate the risk of any single investment or type of investment. This can be achieved by spreading investments across different types of fixed-income securities, different sectors, and varying maturities.
  • Use of Insurance Contracts or “Wraps”: Stable value funds often use wrap contracts from banks or insurance companies to smooth out the impact of interest rate fluctuations on the portfolio. These contracts provide a guarantee that the fund can pay participant-initiated withdrawals at book value, which helps ensure principal preservation and liquidity.
  • Active Management: Professional portfolio managers actively manage stable value funds to optimize risk and return. This involves monitoring the credit quality of the investments, adjusting the portfolio based on market conditions, and managing the relationships with the wrap contract providers.
  • Laddering Maturities: Some stable value funds employ a strategy of laddering maturities of the underlying fixed-income securities. This means the fund holds securities that mature at different times, which can help balance the risk of interest rate changes and provide a steady income stream.
  • Reinvestment of Interest Income: Interest income generated by the underlying securities is typically reinvested back into the fund, which can contribute to a compound return effect.
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Remember that while stable value funds are generally considered a low-risk investment, they are not without risk. There is a counterparty risk associated with the wrap providers, and the returns may not keep up with inflation over the long term. As always, it’s advisable for investors to consult with a financial advisor or do their own research before making investment decisions.

Why Choose Galliard for Your Stable Value Solutions?

  • Performance: A proven track record of regularly surpassing long-term benchmark performance.
  • Team: Over two decades of pioneering and leading the way in the stable value product sector, supported by one of the most experienced teams in the country.
  • Integration: The convergence of the stable value and fixed income teams leads to enhanced efficiency, optimization, and innovative product development in the stable value field.