The market’s waters are likely to get progressively choppier as the Federal Reserve nears a rate hike. Conservative investors seeking an anchor for their portfolios may want to check out stable value funds, says James King, chairman of the Stable Value Investment Association. ‘Participants who are invested in stable value funds can always transact at book value which is their contribution plus accrued interest,’ says King. ‘So it’s a conservative investment – although not risk free – that helps stabilize a portfolio.’ Simply put, a stable value fund is a bond fund with an insurance guarantee. They have a rate of return that is comparable to intermediate term bonds and they outperform money markets historically by about two percentage points. There is currently more than $721 billion is invested in stable value funds, according to the non-profit Stable Value Investment Association. And while a lot of that money comes from Baby Boomers at or near retirement, King says millennials and Gen Xers scared by the crisis of 2008 are also using stable value funds as a safe haven for their retirement plans.
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet visit:
Check out all our videos:
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+:
source
