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Fund sponsors tried a decade or two ago to offer retail stable value funds and couldn't make them work.
In a broad sense, these are investment pools that buy fixed income investments guaranteed by insurers. They may be GICs issued directly by insurers, synthetic GICs, or some variant. http://www.lmstrategies.com/types~2.html
Insurers may offer settlement accounts (like GICs, subject to the ability of the insuer to pay), or fixed annuities, both of which have a SV feel to them.
Thank you msf. I have access to TIAA-CREF 3.0% SVF but requires a separate Supplemental Retirement Account to be established above and beyond the Retirement Account contributions.
As noted in my original citation (which I've got to read more carefully), one can invest in stable value funds via 529 plans, e.g. Colorado's CollegeInvest Stable Value Plus option. The CollegeInvest option is effectively a MetLife GIC, which currently pays 2.54% (3.25% less admin fee of 0.71%).
If you don't use the plan for college expenses, you can still get the money out by paying a 10% penalty on the earnings. That reduces the current rate to an effective 2.29% - still much better than a CD or bank account or MMF.
Stable value funds are generally available in 401(K) in large companies. It provides a slightly higher yield than money market with a fixed NAV of $1. I used it in the past to park my cash position and the one available has low ER.
For retail investors, I would recommended low cost, short term investment grade bond funds instead. Any funds with ER above 0.10%, it will erode the already small yields. Last time I reviewed Vanguard they have several short and ultra-short term bond and bond index funds with YTD return about 2-3%. Not too bad given money market funds pay next to nothing.
Comments
Derf
http://stablevalue.org/knowledge/faqs/question/why-cant-i-find-a-stable-value-investment-option-for-my-ira
Fund sponsors tried a decade or two ago to offer retail stable value funds and couldn't make them work.
In a broad sense, these are investment pools that buy fixed income investments guaranteed by insurers. They may be GICs issued directly by insurers, synthetic GICs, or some variant.
http://www.lmstrategies.com/types~2.html
Insurers may offer settlement accounts (like GICs, subject to the ability of the insuer to pay), or fixed annuities, both of which have a SV feel to them.
If you had gotten a TIAA IRA before 2010, the traditional annuity option would be paying 3%. (They pay only 1% on newer IRAs). IMHO that was one of the best deals going.
http://www1.tiaa-cref.org/public/fyi/performance/retirement/traditional/
The Bartelle fund is for employer plans (401(k), etc.):
https://www.bogleheads.org/forum/viewtopic.php?t=121341
"The fund is not a mutual fund. It is a separately managed investment fund available only to tax-qualified plans and their eligible participants."
https://retirementplans.vanguard.com/pe/pdfs/F4791.pdf?cbdForceDomain=false
Derf
Derf
If you don't use the plan for college expenses, you can still get the money out by paying a 10% penalty on the earnings. That reduces the current rate to an effective 2.29% - still much better than a CD or bank account or MMF.
Be aware that there may be some legal issues if you open a 529 plan with with no intention of using it for college expenses.
See: http://www.justanswer.com/law/8azaf-short-term-fixed-income-investment-instruments.html
For retail investors, I would recommended low cost, short term investment grade bond funds instead. Any funds with ER above 0.10%, it will erode the already small yields. Last time I reviewed Vanguard they have several short and ultra-short term bond and bond index funds with YTD return about 2-3%. Not too bad given money market funds pay next to nothing.