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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2023

Stable Value Funds: A Layer of Protection

Stable Value Funds Stock Market Ticker Share Prices 3d Illustration

Stable value funds* contain a diversified portfolio of fixed-income securities designed to help reduce overall portfolio risk while earning returns that mirror those of an intermediate-term bond fund. Stable value funds offer minimal volatility and low correlation to other asset classes.


The Benefits
Stable value funds typically invest in high-quality short-term and intermediate-term government and corporate bonds. Investors receive specified interest payments. Although bonds in the fund won’t increase dramatically in value over time, the expectation is that they won’t lose principal.


Stable value funds can be used to help reduce the volatility of a portfolio. They represent a possible alternative to lower yielding investments, such as money market funds, since stable value funds tend to offer higher returns.


Two Components
Stable value funds are composed of two parts: bonds and insurance contracts issued by insurance companies and banks. The insurance component offers the potential that the value of the fund won’t decline, no matter what interest rates are doing. Funds may spread insurance contracts among multiple insurers or banks to add diversification.


Four Types

  • Individually managed accounts are offered by an investment manager and managed for a specific plan’s participants.

  • Pooled funds are offered by an investment manager and combine the assets of unaffiliated plans into one fund.

  • General account products are guaranteed by a single insurance company and backed by their general fund.

  • Separate account products are offered and guaranteed by a single insurance company from a separate account. Each insurance company has its own fees, charges and limitations so refer to their prospectus.


The Downsides
Funds may come with extra management costs and fees, potentially reducing yields. Funds generally are available only to participants in certain 401(k) and other defined contribution retirement plans. Some college savings plans may also offer stable value funds as an option. If you’re thinking of rolling over a 401(k) to an individual retirement account (IRA) in the future, you won’t find a stable value fund offered by a brokerage.

Stable value funds in your 401(k) plan may have names such as principal preservation, capital accumulation, or guaranteed income funds. Talk to your financial professional before you invest.


*A stable value investment is neither insured nor guaranteed by the U.S. government. There is no assurance that the investment will be able to maintain a stable net asset value, and it is possible to lose money in such an investment. All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
Meaglia Financial Consulting and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

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