Stable Value Fund

DEFINITION of 'Stable Value Fund'

An investment vehicle found in company retirement plans. 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.

BREAKING DOWN '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.

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