Chicago, IL : In Retirement Plan Advisors (RPA)’s newest white paper, Chief Investment Officer Kip Robbins, CFA, and President Josh Schwartz, AIF, discuss the appropriate use of fixed/stable value funds in participant-directed defined contribution retirement plans.
If a plan participant wants a balanced portfolio of 60% equities and 40% fixed income, how much of the 40% should be in stable value versus bond funds? What are the relative risks? What about returns? How do stable value and bond funds behave in a diversified portfolio over time?
“Stable value funds frequently hold the largest investment allocation in a participant-directed retirement plan – particularly in a nonprofit or public sector plan, where participation is wholly voluntary,” said Joshua Schwartz, President at Retirement Plan Advisors. “However, RPA’s research shows that a core bond strategy provides better risk-adjusted performance in a balanced portfolio.”
