what is a stable value fund 
a stable value fund is a portfolio of bonds that are insured to protect the investor against a decline in yield or a loss of capital the owner of a stable value fund will continue to receive the agreed upon interest payments regardless of the state of the economy stable value funds are a common option in some retirement plans such as company 401 k plans especially aimed at those savers nearing retirement understanding stable value fundstable value funds invest in high quality government and corporate bonds short term and intermediate term they are no different from any bond fund except they are insured an insurance company or bank is contractually obligated to protect the fund s investors from any loss of capital or interest the bonds in such a fund are sometimes called wrapped bonds referring to the fact that they are insured the insurance is commonly issued in the form of a so called synthetic guaranteed investment certificate gic a stable value fund is inherently as safe an investment as a money market fund historically such funds provide a slightly higher rate of return than money market funds pros and cons of stable bond fundsstable value funds remain just that stable they don t grow over time but they don t lose value either in times of recession or stock market volatility stable value funds are guaranteed while many other investments drop in value the owner of a stable bond fund continues to receive the agreed upon interest payments and never loses principal regardless of the state of the economy the insurer must compensate the fund for any losses because of the insurance however these funds come with extra management costs and fees which can be a drag on the already lower yields that these investments offer due to their low risk 