Strategy Spotlight

A review of Managed Pooled Stable Value Funds & Insurance General Account Stable Value Products

We chart three key differences between the two stable value product types to help you determine which best meets your participants’ needs.

There are a variety of stable value products in the market today that have similar features on the surface, but have distinct differences when you dig into the structure and implementation. Two of the most common are Managed Pooled Stable Value Funds (Pooled Fund) and Insurance General Account Stable Value Products, also known as Guaranteed Insurance Contracts (GIC). Here we compare three key differences between the two product types to help you determine which option may best meet your participants’ needs.

1) Transparency

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Past performance is not a guarantee or a reliable indicator of future results.

All investments contain risk and may lose value. There is no guarantee that a stable value fund will achieve its investment objective. Like other actively managed investments, stable value investments are subject to investment management risk. Stable value funds are not FDIC-insured, may lose value and are not guaranteed by a bank, insurance company or other financial institution. Although stable value investments seek to reduce the risk of principal loss, investing in a stable value fund involves risk including loss of principal, and market risk related to the underlying securities in the fund’s portfolio. Returns on stable value investments can also vary from benchmark indices and the crediting rate for a stable value fund will be affected by, among other factors, the prevailing general level of interest rates, the performance of the fund’s fixed income investments and cash flows into and out of the fund.

Stable value investment contracts are issued by insurance companies, banks and other financial institutions, are intended to help reduce principal volatility of, while providing steady income from, any associated fund fixed income investments, and are intended to be valued at contract value (typically, deposited principal plus accrued interest less redemptions). Investment contracts vary and may include insurance company separate account contracts, synthetic contracts (also known as wrap contracts) or insurance company general account contracts.

PIMCO does not offer insurance guaranteed products or products that offer investments containing both securities and insurance features.

Statements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice. The information contained herein does not take into account the investment objectives, financial situation, or needs of any particular investor.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2022, PIMCO.

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