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Everything You Wanted to Know (and Maybe What You Don’t Want to Know) About Stable Value

As stable value investments become more popular in DC plans — falling somewhere between money market funds, where returns are low but so are risks, and mutual funds, where both returns and risks may be higher — advisors need to understand how stable value works. In a simple but comprehensive article, an advisor gives an overview about how GICs and stable value works — explaining, among other things, the difference between funds held in a general account and subject to general creditors vs. separate accounts as well as the various hidden costs above and beyond management fees. The author raises the question of whether these fees are subject to the 408(b)(2) and 404(a)(5) fee disclosure rules and opines about the future of stable value funds given the real possibility of rising costs resulting from lower interest rates. The article is here.

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