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How Stable Value Funds Fit in Your Portfolio

If you have access to these fixed-income investments, they are a good place to keep money you might withdraw soon in retirement.

What is a stable value fund, and how would it fit in my portfolio? --T.W., via e-mail

A stable value fund is a type of fixed-income investment. Stable value funds are less volatile than intermediate-maturity bond funds but recently have paid a lot more than money market funds. They are available only in employer-sponsored retirement plans (not IRAs); about half of 401(k)s and about two-thirds of 403(b) and 457 plans offer them.

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Over the past year through February 28, the Hueler stable value pooled index, which measures the total return of stable value funds, returned 1.7%, while money market funds earned nothing. “A stable value fund can add ballast to your portfolio and is a great vehicle for parking the money you might be withdrawing soon in retirement,” says Judith Ward, a certified financial planner with T. Rowe Price.

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