John Hancock Retirement and John Hancock Investment Management, companies of Manulife Investment Management, have launched the John Hancock Stable Value Guaranteed Income Fund.
While previewing the new product, Patrick Murphy, CEO of John Hancock Retirement, said the fund represents a new principal stable value option within the firm’s lineup of retirement investments.
According to John Hancock, the fund seeks to provide plan participants with steady and stable returns, guaranteed principal and interest, and daily liquidity. It does so by investing in John Hancock’s General Account, which Murphy describes as a well-diversified portfolio of investment-grade fixed income investments.
Technically, the new fund is offered through a group annuity contract, with underlying assets issued and guaranteed by the John Hancock Life Insurance Company. John Hancock Life Insurance Company has been a stable value asset manager since 2006, with total stable value assets under management greater than $2.7 billion.
“The fund is a valuable option for the conservative portion of anyone’s portfolio,” Murphy says. “For retirees and near retirees, its guarantee of principal and interest provides principal preservation and a predictable income stream that they can rely on during their retirement years. For individuals who are uncomfortable with market volatility and those seeking to diversify their investments across a range of asset classes, Stable Value Guaranteed Income Fund’s guarantee of principal and interest provides steady and stable returns protecting these assets from loss in the event of a market downturn.”
According to Murphy, the new fund generally will offer a rate higher than similar type investments, i.e., money market funds, without increased risk.
Effective immediately, the fund is available on the John Hancock Retirement open architecture platform. The fund will also be launched on John Hancock’s Signature Platform next year. The fund is available for 401(k), 401(a), governmental 457(b) and Taft-Hartley plans. It is fully portable and benefit responsive upon plan termination and has no initial investment minimums.
Asked how this new products announcement fits into the broader retirement plan industry conversation about “decumulation” of defined contribution (DC) plan assets, Murphy says that stable value funds, with their guarantee of principal and guaranteed payment of predictable income, can be a valuable part of a plan’s investment lineup and a participant’s decumulation strategy.
“As more plan sponsors focus on keeping terminated and retired participants in plan, including investment options that meet retirees’ spending needs and principal preservation objectives has become increasingly important,” he says.