Stable Value Fund

AAA

DEFINITION of 'Stable Value Fund'

An investment vehicle found in both company retirement plans and, quite recently, IRA accounts. Stable value funds are comprised of mostly 'synthetic GICs' (known also as wrapped bonds) because of their inherent stability. These bonds can be short or intermediate term with longer maturities than other choices such as money market funds. They are paired (or wrapped) with insurance contracts to guarantee a specific minimum return.

INVESTOPEDIA EXPLAINS 'Stable Value Fund'

In times of economic recession, stable value funds can prove to be a most valuable investment to have. While many other investments' returns are much lower in hard times, stable value funds remain just that, stable. The owner of the investment will continue to receive the agreed upon interest rate as well as the full principal regardless of the state of the economy. Generally speaking, funds and pooled investments tend to be less risky as the investment is not reliant on one specific company, stock, etc.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Money Market Account

    An interest-bearing account that typically pays a higher interest ...
  3. Money Market Fund

    An investment fund that holds the objective to earn interest ...
  4. Guaranteed Investment Contract ...

    Insurance contracts that guarantee the owner principal repayment ...
  5. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
  6. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
RELATED FAQS
  1. What are the main risks to the economy of a country that has implemented a policy ...

    The main risk to the economy of a country that has implemented a policy of austerity is the potential for a self-reinforcing, ... Read Full Answer >>
  2. How does wage price spiral impact interest rates?

    A wage-price spiral occurs when wages and prices rise in tandem in a self-perpetuating cycle that exerts inflationary pressure ... Read Full Answer >>
  3. What austerity measures can a country implement to curtail government spending?

    Broadly speaking, there are three types of austerity measures. The first is focused on revenue generation (higher taxes), ... Read Full Answer >>
  4. What can governments do to stop or slow a wage price spiral?

    A wage-price spiral is an economic cycle in which rising wages increase consumer demand, causing prices to rise. Rising prices ... Read Full Answer >>
  5. How are interest rates related to open market operations?

    Interest rates are indirectly affected by open market operations (OMOs). OMOs are a tool in monetary policy allowing a central ... Read Full Answer >>
  6. When is a bond's coupon rate and yield to maturity the same?

    The collapse of Enron – and its subsequent fallout – is perhaps the most infamous event in modern American corporate history. ... Read Full Answer >>
Related Articles
  1. Retirement

    Tips On How To Use IRAs To Boost Retirement Savings

    According to the Trustees of the Social Security Fund, the fund will be depleted by 2037. Are you ready?
  2. Investing

    The Ups And Downs Of Investing In Cyclical Stocks

    This strategy can be profitable but only if you know when to dump these stocks.
  3. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  4. Active Trading Fundamentals

    Recession: What Does It Mean To Investors?

    Understanding the business cycle and your own investment style can help you cope with an economic decline.
  5. Retirement

    Stable Value Funds: Risk Less And Earn More

    Stable value funds can provide higher yields and lower risk.
  6. Savings

    7 Ways To Recession-Proof Your Life

    Find out what you can do to prepare and cope in tough economic times.
  7. Options & Futures

    You CAN Retire In A Recession

    Just because you receive your gold watch during a recession, doesn't mean you can't retire on time.
  8. Options & Futures

    Net Worth Nosedive: Can You Still Retire?

    If a dip in the economy has you worried about retirement, you still have options.
  9. Options & Futures

    Pick 401(k) Assets Like A Pro

    Professionals choose the options available to you in your plan, making your decisions easier.
  10. Personal Finance

    Five Of The Largest Asset Bubbles In History

    The five bubbles discussed here were among the biggest in history; their lessons should be heeded.

You May Also Like

Hot Definitions
  1. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  2. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  3. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  6. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!