Vanguard - Fund overview - Stable Value (2024)

FAQs

Does Vanguard have any stable value funds? ›

The stable value funds hold insurance contracts to wrap the underlying fixed income strategies. This allows the stable value fund to use book-value accounting, permitting the fund to maintain the stable share price. Why Vanguard stable value? Vanguard has been managing stable value since 1984.

Stable value funds serve as a happy medium between cash and money market funds, which have low yields, and bond funds, which have higher risk and volatility. These funds provide higher rates of interest with little or no fluctuation in price.

“Vanguard is financially strong, demonstrated clearly by the strong and steady cash flows experienced over the past two decades, including the 2008-09 financial crisis,” said spokeswoman Emily M. Farrell.

The Vanguard Health Care ETF (VHT, $245.85) is tops among all bear market ETFs period, and it's certainly one of the safest Vanguard funds to put to use in a bear market.

Historically, because of the longer-term nature of stable value's holdings, they have usually returned a premium over money markets: 1.33% on average annually over 10 years and just over 2% since 1990.

Are stable funds safe? In general, yes. “All investments have some amount of risk involved,” Gross says. “If the underlying bonds are of high quality and are held to maturity, the risk is much lower than general stock or bond trading.”

Stable value products are benefit responsive meaning participants withdraw their original deposit amount plus accrued interest, which is called contract value at any time.

In a rising rate environment, stable value investors gain the benefit of reinvesting at higher rates, while being protected from the associated mark-to- market decline in market value.

Key Takeaways

A stable value fund is an insured bond portfolio, popular with investors that have low risk tolerances. The insurance piece of these funds makes them nearly as safe as money market funds.

How do I choose a stable value fund? ›

Conduct an in-depth analysis, review and valuation of the underlying investments, including credit quality, asset allocation, risk and fund performance evaluation. Obtain a full understanding of the risk/reward characteristics that will result in any variance between the market value and book value of the fund.

“U.S Treasury securities are considered the safest investment option, as they are backed by the full faith and credit of the U.S government. These investments come in several forms such as savings bonds, treasury notes, treasury bills, and more,” Chavez said.

Which is better for retirement: Fidelity or Vanguard? While Fidelity wins out overall, Vanguard is the best option for retirement savers. Its platform offers tools and education focused specifically on retirement planning.

Is Charles Schwab better than Vanguard? After testing 17 of the best online brokers over three months, our analysis finds that Charles Schwab (94.51%) is better than Vanguard (78.25%).

Stable value funds invest in high-quality government and corporate bonds, short-term, and intermediate-term. They are no different from any bond fund, except they are insured. An insurance company or bank is contractually obligated to protect the fund's investors from any loss of capital or interest.

Vanguard U.S. Value Fund merger

Shareholders of the $1.1 billion Vanguard U.S. Value Fund approved a proposal to merge the fund into the $96.9 billion Vanguard Value Index Fund.

Investment in any strategy involves a risk of loss. Stable value funds and money market funds share common objectives with comparable risks. Historically, stable value fund investors have experienced a return advantage over money market fund investors through a full interest rate cycle.