Stable Value Funds and Disclosure Issue Regarding Fees

While I like to post original content for my blog, sometimes I run across articles that just say it as well, sometimes better, than I could. This article from Morningstar presents evidence on Stable value funds that every investor should consider before investing in a stable value fund. Many 401(k) plan contain such an investment option and, based on the plan’s Form 5500, it appears many choose to invest in the option. As the article points out, in some cases the issuer of the stable value fund actually makes more money off of an investor than the investor receives as a result of the “spread” involved with the management of the stable value fund’s assets. Investors need to always remember that any and all costs associated with an investment reduce the end return that the investor receives.

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