|
A stable value fund buys
stable value contracts (also called guaranteed investment contracts or GICs) offered by
insurance companies or banks. Under the terms of these contracts, the contract issuer
invests the stable value fund's money in a portfolio of fixed income investments, such as
bonds or mortgages, for an agreed-upon period of time. The issuer guarantees a regular
rate of return for the duration of the contract and assumes all investment risk.
If investment returns are lower than expected, the issuer still pays you the specified
amount and takes the loss. If investment returns are higher than expected, the issuer gets
to keep the extra profit.
You should remember that, as a rule, it is never a good idea to invest in any fund until
you read its prospectus and understand the risks involved. |
|
