Stable Value Fund
A Stable Value Fund is a type of investment vehicle typically offered in retirement plans that aims to provide a stable return while preserving Capital. These funds invest in a diversified portfolio of fixed-income investments, such as government and corporate Bonds, and are backed by insurance contracts or bank investment contracts that stabilize the value of the fund. The primary goal is to maintain a consistent net Asset value, usually at $1 per Share, which makes them attractive to conservative investors looking for stability and lower risk.
Examples of Stable Value Funds include:
- Corporate Stable Value Funds: These invest primarily in corporate Bonds and are backed by wrap contracts from insurance companies.
- Government Stable Value Funds: These focus on government Securities and typically offer lower risk.
Cases where Stable Value Funds might be beneficial include:
- Retirement Savings Plans: Employees looking to preserve Capital while earning a steady return often choose these funds in their 401(k) plans.
- Risk-Averse Investors: Individuals who prioritize Capital preservation over high Returns may allocate a portion of their portfolio to Stable Value Funds.