From the Wall Street Journal: ‘Stable’ Funds in your 401(k) May Not Be. The article discusses how fiduciaries are reviewing their stable-value fund offerings and “looking to move retirement-plan assets out of certain stable-value funds because of performance concerns” but “finding it’s not always easy to do so.”
In a recent report, David Merkel, chief economist and director of research at brokerage firm Finacorp Securities, advised clients who use stable-value funds to “consider moving funds out if the market value is unlikely to be able to support the book value.”
“I would not be surprised to see a stable-value fund fail in 2009,” Mr. Merkel later said in an interview.
The Stable Value Investment Association’s Ms. Mitchell replies: “It’s got to be a cataclysmic event for that to happen. I’m not saying it can’t happen, but it would be the perfect storm.”