Stable Value Fund
Candlefocus EditorInsurance is a key feature of stable value funds. The insurance guarantees that investors receive their full principal and any interest that has been earned. The insurance provider might be a large financial institution or a government-sponsored organization. This guarantee allows investors’ funds to stay safe and their capital stable, even if the fund experiences losses.
Stable value funds are often included in retirement plans, such as 401(k)s and 403(b)s. Not only does it offer low risk and stability, but it may also provide a slightly higher yield than traditional money market funds. For those investors that are looking for safety of principal and as much return as possible these funds are an attractive option.
However, while they provide stability, they typically pay a lower rate of interest than other investment funds, such as corporate bonds and stock funds. Additionally, there may be high administrative fees associated with the funds. Investors should review the fund’s expenses and fees to determine if it is a good fit for their long-term goals.
All in all, stable value funds can offer investors with low-risk tolerances an opportunity to protect their capital and generate a slightly higher rate of return than a money market fund. Investors should take time to consider their own risk tolerance and personal financial goals when determining if this type of fund is appropriate for their portfolio.