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I recall one stable value fund we moved money into in June of 2008 to resemble the notations in the above link. I also recall some research into this area and of course, a company that insures against losses in such a fund could also crash and burn during a hugh market melt. During late 2008 and early 2009 we received email notices from two organizations having stable value choices that the funds were and would indeed be safe and not crash as the rest of the equity market had done. 'Course, that is just the word of someone trying to comfort investors. No details were offered. Also, at the time of the market melt; these stable value funds had a set annual yield around 4%......can't remember exactly. I find no reason to not use a stable value choice at this time. NOTE: one detail I recall about stable value choices is that a vendor may be able to impose a time frame for holding into this area and/or a restriction that once monies are moved into stable value, one may only be able to move 25% of the holdings during time frame "x" into other account choices. You may choose to dig through the prospectus of the offering to determine if such language exists. Take care, Catch
Not to put too fine a point on it, but it depends on what "required" means. I'm guessing you are thinking asset allocation, but one isn't "required" to hold any cash - that's just an allocation choice.
What you mean matters because, as Catch pointed out, stable value funds have less liquidity than cash (or a MMF). So if you're "required" to have cash on hand to buy on dips, then a stable value fund may not meet the requirement. On the other hand, if you're looking at the SV fund to adjust your portfolio's risk, then it should suffice, as it is not significantly more risky than cash - both in terms of volatility and in terms of risk of loss.
Thanks for your time & replies. I'm looking to do a roll over & put everything into stable value ,but will need to do some more work to see what the ins & outs pertaining to the stable value are. Maybe I'll put everything in VG ret. income . Have a good weekend, Derf
Comments
Investopedia's take on stable value funds.......
http://www.investopedia.com/terms/s/stable-value-fund.asp
I recall one stable value fund we moved money into in June of 2008 to resemble the notations in the above link. I also recall some research into this area and of course, a company that insures against losses in such a fund could also crash and burn during a hugh market melt. During late 2008 and early 2009 we received email notices from two organizations having stable value choices that the funds were and would indeed be safe and not crash as the rest of the equity market had done. 'Course, that is just the word of someone trying to comfort investors. No details were offered. Also, at the time of the market melt; these stable value funds had a set annual yield around 4%......can't remember exactly.
I find no reason to not use a stable value choice at this time.
NOTE: one detail I recall about stable value choices is that a vendor may be able to impose a time frame for holding into this area and/or a restriction that once monies are moved into stable value, one may only be able to move 25% of the holdings during time frame "x" into other account choices. You may choose to dig through the prospectus of the offering to determine if such language exists.
Take care,
Catch
What you mean matters because, as Catch pointed out, stable value funds have less liquidity than cash (or a MMF). So if you're "required" to have cash on hand to buy on dips, then a stable value fund may not meet the requirement. On the other hand, if you're looking at the SV fund to adjust your portfolio's risk, then it should suffice, as it is not significantly more risky than cash - both in terms of volatility and in terms of risk of loss.
Have a good weekend,
Derf