Clark Galvan
New York Life Investment Management (NYLIM) is a financial advisor firm with over $100 billion in assets under management (AUM). The company offers a range of investment options, including mutual funds, exchange-traded funds (ETFs), and 529 college savings plans. NYLIM has a long history of providing stable value solutions and has more than $35 billion in stable value assets under management. The company's investment approaches vary depending on the program, but they generally seek to drive returns while managing risk according to the client's tolerance. While NYLIM is a fee-based firm, it is also a fiduciary, which means it must always act in the best interests of its clients. The company offers comprehensive, customized solutions and has a commitment to doing what's right, with a focus on financial strength, mutuality, and sustained growth.
What You'll Learn
New York Life's stable value solutions for over 40 years
New York Life has been providing stable value solutions for over 40 years and has more than $35 billion of stable value assets under management. The company offers general account, separate account, and collective investment solutions to fit all sizes and types of plans. Their stable value solutions include defined contribution plans, defined benefit plans, executive benefit plans, 529 college savings plans, Taft-Hartley plans, 403(b) plans, and 457 government plans.
The stable value asset class offered by New York Life is designed to perform consistently through rising and falling interest rate environments and within all economic market cycles. Their solutions provide stability, strength, and leadership, with the highest financial strength ratings awarded to any U.S. life insurer by all four major ratings agencies: A.M. Best, Moody's, Fitch, and S&P.
New York Life's stable value products have been added to prominent platforms such as TD Ameritrade Trust Company, reflecting their strong position in the retirement plan industry. Their solutions are popular among investors due to the stability of principal, liquidity, and competitive returns. Compared to bond funds, stable value options are less volatile, and they typically offer higher returns than money market funds.
The company's Guaranteed Interest Account (GIA) and Anchor Account are key components of their stable value offerings. The GIA has delivered steady, predictable returns through various economic cycles, outperforming money market funds. The Anchor Account, with its daily adjustable crediting rate, provides flexibility and security.
New York Life's stable value solutions are well-regarded in the industry, with a presence in many state 529 programs. Their experienced sales and client relationship teams provide customized support to financial advisors and their clients, helping them navigate the complexities of stable value funds and positioning this unique asset class effectively within their clients' investment lineups.
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The stable value asset class and its consistent performance
Stable value is a unique fixed-income asset class that has been offered by New York Life for over 40 years, with more than $35 billion of stable value assets under management. It is designed to perform consistently through rising and falling interest rate environments and within all economic market cycles.
Principal Preservation
Stable value funds are designed to provide a guarantee of principal and accumulated interest, ensuring that participants do not experience negative returns. This is achieved through an insurance "wrap" that guarantees investors receive their principal and the agreed-upon interest rate, regardless of the market value of the assets in the portfolio. This insurance wrap is a key differentiating feature of stable value funds, allowing participants to invest and redeem at book value, even in periods of market volatility.
Less Volatile Returns
Stable value funds provide bond-like returns with exceptionally low volatility, making them an attractive option for investors seeking a strong risk/return profile. The funds have a crediting rate, often considered the return on investment, which reflects market interest rates with a time delay. This delay is due to an accounting mechanism that amortizes gains and losses over a specified period, resulting in a smoothing of the volatility of returns to investors.
Capital Preservation and Accumulation
Stable value funds offer the benefit of capital preservation and accumulation, with low-returns volatility. Historically, stable value returns have exceeded the returns of money market funds and inflation. This makes stable value a compelling option for pre-retirees and retirees who want to preserve their capital while also taking advantage of additional capital accumulation opportunities.
Understanding Stable Value Funds
Stable value funds come in four primary types: individually managed accounts, pooled funds, insurance company general accounts, and insurance company separate accounts. Each type has different characteristics, and it is up to the plan sponsor to decide which type best suits their needs. However, all stable value funds have a contractual element that protects against interest rate volatility, providing plan participants with safety, liquidity, and attractive returns.
In summary, the stable value asset class offered by New York Life provides a unique combination of benefits, including principal preservation, consistent positive returns, and liquidity for participant benefit payments. With its low volatility and strong historical performance, stable value has established itself as a reliable investment option for those seeking capital preservation and steady growth.
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The Guaranteed Interest Account (GIA) and its steady returns
The Guaranteed Interest Account (GIA) is a savings account that provides a guaranteed interest rate for a specific period. The interest rate is locked in for the duration of the account and cannot be changed. GIA accounts are typically offered by insurance companies and are ideal for those seeking a secure, stable, and predictable investment option.
GIA accounts are often chosen by investors who want to protect their portfolio from market exposure and guarantee a predictable return. They are also a good option for those seeking a short-term, low-risk investment with a guaranteed rate and fixed income. The interest rate on a GIA is fixed, meaning it will not fluctuate with the market. This provides investors with stability and the assurance of a steady return.
In addition to stability, GIA accounts offer other benefits such as tax advantages, creditor protection, and the ability to name a beneficiary. Tax advantages include the ability to defer taxes on GIA interest for up to one year and the potential for GIA interest income to qualify for the pension income tax credit for those aged 65 or older. GIA accounts may also provide creditor protection, safeguarding personal assets from creditors in the event of a lawsuit or financial difficulties.
When considering a GIA, it is important to note that there is still some interest rate risk. While the GIA interest rate remains fixed, market interest rates can fluctuate, causing the value of the account to decrease if the market interest rates rise. Additionally, GIA accounts may have limitations and penalties for early withdrawal, and the returns may be lower compared to other types of investments such as stocks or mutual funds.
Overall, the Guaranteed Interest Account (GIA) is a stable investment option that offers a guaranteed interest rate and steady returns. It is ideal for those seeking a secure and predictable investment, particularly those looking for a short-term, low-risk option.
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The Anchor Account crediting rate and its variability
The Anchor Account crediting rate is subject to change daily. The rate is set based on a formula agreed upon by the Reliance Trust Company and the New York Life Insurance Company and is influenced by the value of the assets in the Anchor Account. The rate is also adjusted to reflect the market value of the underlying assets.
The Anchor Account is a pooled separate account that invests primarily in a diversified portfolio of high-quality, fixed-income securities. It is designed to preserve principal and accumulated interest, with a low correlation to equities and a volatility level similar to medium-term bond funds.
As of September 30, 2024, the New York Life Anchor Account had a crediting rate of 4.33%. Previously, the rate was 2.27% as of February 28, 2021.
The New York Life Insurance Company has earned the highest financial strength ratings from all four major ratings agencies: A.M. Best, Moody's, Fitch, and S&P.
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The role of the guarantor in stable value investments
New York Life has been providing stable value solutions for over 40 years and has more than $35 billion of stable value assets under management. The company offers a range of investment solutions, including general account, separate account, and collective investment options, to fit all sizes and types of plans. The stable value asset class is designed to perform consistently across various economic cycles and interest rate environments.
The role of the guarantor is crucial in stable value investments, especially in the context of retirement plans. As retirement investors navigate the volatile stock and bond markets, a financially strong and dependable guarantor acts as a rudder, providing stability and assurance. New York Life, with its superior financial strength ratings from all four major ratings agencies, fills this role admirably.
The importance of the guarantor is further highlighted in the company's stable value offerings, such as the Guaranteed Interest Account (GIA) and the Anchor Account. These accounts provide steady, predictable returns and principal protection, with New York Life Insurance Company guaranteeing the principal and accumulated interest. This guarantee is a testament to the company's long-term commitment to its customers and its strong financial position.
Financial advisors play a pivotal role in evaluating and recommending stable value funds to their clients. They must understand the intricacies of stable value structures and make informed decisions on behalf of their clients. New York Life supports financial advisors in this process by providing professional guidance and expertise in deconstructing and understanding stable value funds.
In conclusion, the guarantor plays an essential role in stable value investments by offering stability, dependability, and peace of mind to investors. New York Life, with its strong financial position and commitment to customers, exemplifies the role of a trusted guarantor in the realm of stable value investments.
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Frequently asked questions
New York Life Investment Management (NYLIM) is a financial advisor firm located in New York City with over $100 billion in assets under management (AUM).
New York Life offers a wide variety of investment vehicles that can be customized to meet your specific life circumstances and financial goals. You'll be paired with an experienced financial services professional who is dedicated to helping you identify your investment needs and goals. They also offer tax-deferred investment accounts and retirement plans.
New York Life offers stable value investments, mutual funds, exchange-traded funds (ETFs), and 529 college savings plans.
New York Life has been providing stable value solutions for over 40 years and has more than $35 billion of stable value assets under management. Their stable value asset class is designed to perform consistently through rising and falling interest rate environments and within all economic market cycles.
You can contact New York Life Investment Management via its website or by calling (800) 624-6782.
