As the market environment for defined contribution plans continues to evolve, we believe the demand remains strong for investment options that seek to earn current income and preserve principal. Historically, these objectives have been met through money market and stable value options. In our view, the decline in interest rates over the last 30 years, the relatively low level of current yields and the evolving regulatory landscape present a number of considerations for defined contribution plan sponsors. As a result, stable value continues to be an important capital preservation investment option. In addition, the Securities and Exchange Commission’s (SEC) reform of money markets may also cause plan sponsors to re-evaluate the capital preservation options in their plans.
Liquidity management is a crucial component of stable value funds. We seek to align the liquidity component within stable value portfolios with each plan’s liabilities to help ensure that distributions can be optimally covered at book value.
We assess a plan’s liability profile based on quantitative and qualitative factors to construct and monitor stable value portfolios. We seek to construct diversified portfolios across fixed income sectors, with exposures to the short and intermediate parts of the interest rate term structure. We also diversify by strategy, benchmark and fixed income manager.
Risk budgeting is central to our process. We leverage proprietary global risk models using input data from over 800 market factors to customize risk budgets. Risk exposures and performance attribution are tracked on a daily basis.
Experienced stable value team
Our team consists of stable value industry experts who are backed by a global asset management organization that is committed to stable value investing.
Global fixed income team
Our broad fixed income platform enables us to identify global trends within a risk controlled framework and determine what impact these have on US fixed income markets.
Results-oriented portfolio construction
Our process seeks to match portfolio assets with the plan’s expected liability.
Maturing fixed income
Our Term Funds utilize a laddered bond strategy that seeks to provide competitive risk adjusted returns, predictable liquidity, and dampened volatility.
We have flexibility in combining our own fixed income strategies with those of approved external managers to create customized portfolio solutions for our clients.
Within this unique and customized asset class it is critical to have trusted and transparent wrap partners.
Full transparency to clients
We offer clients a transparent product solution that offers frequent and pertinent investment, risk and fee disclosure.
For more information, please contact your GSAM relationship manager