With Gina Mitchell, President – Stable Value Investment Association
Podcast: |
A Stable Value fund is a low-risk investment vehicle offered by defined contribution plans that provides a unique combination of benefits such as capital preservation and steady growth in principal and earned interest, with returns similar to intermediate bond funds – about 2% or so – with the liquidity and certainty of money market funds. Stable Value funds are a core investment option in defined contribution employee benefit plans such 401(k), 403(b), 457 and 529 (tuition assistance) plans, and offer higher return potential than money market funds.
So these funds offer good return potential with lower risk, while also capturing growth, and could be ideal for millennial investors who are rather risk averse and reportedly have close to a third of their money in cash or money market funds. And, when the crisis hit in 2008, stable value investors came out really ahead with continued positive returns while other investments were deep in the red. So Stable Value funds could be a useful tool in portfolio diversification.
