No. of Recommendations: 0
I moved to a stable value fund recently, thinking this was the safe haven.

Interesting. I had not heard of these before. According to SmartMoney these averaged 5.6% over the past 12 months. Not too exciting but pretty good compared to most investments lately!

Now I'm seeing that this fund has contracts with AIG, JP Morgan, B of A, and others. How STABLE is this?

What's the name of the fund? "Contracts" could be anything, perhaps research or brokerage. Does your source say?

Then there's this: (from SmartMoney)

Now the majority of stable-value assets are invested in "synthetic GICs," also known as "wrapped bonds". These are high-quality, short- to intermediate-term bonds that are bound by insurance "wrappers." The way it works is if a stable-value portfolio falls below the rate of return set by the wrapper, the insurer pays the difference, keeping the fund stable. On the other hand, if the portfolio gains beyond the wrapper's set return, the fund pays the insurer the difference. Wrapped bonds currently comprise about 60% of the assets of the average stable-value fund.

Bottom Line: I'd say your fund is probably pretty safe unless it has a big dependency on AIG. And even then, AIG is too big to fail, so it'll be bailed out.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.