Stable value investments have been a core investment option in defined contribution retirement plans since the 1970s and are an attractive alternative to money market investments due to steady returns and principal preservation guarantees. Stable value funds have proven their worth to investors during the protracted period of low interest rates present since the recent financial crisis. Consider the following comparison of 2007-2016 calendar year total return for the Vanguard Federal Money Market Fund (VMFXX) to the SBS MetLife Stable Value Fund.
- What is a stable value fund?
Stable value funds are low-risk, capital preservation investment options available in employer-sponsored retirement plans and other savings plans. They are invested in high quality, diversified fixed income portfolios and feature protection against interest rate volatility through contracts from insurance companies or banks.