A recent paper published in Risks by David F. Babbel and Miguel A. Herce describes how stable value funds work and investigates their performance in US defined contribution retirement savings plans. Professor Babbel and Dr. Herce find that over the 1988 – 2015 period, stable value funds outperformed money market and intermediate-term bond funds when evaluated with mean-variance, stochastic dominance, and intertemporal dynamic optimization techniques. The authors also demonstrate that including stable value funds in a broader portfolio of bonds and stocks significantly expands the available historical risk-return opportunities, especially for more risk-averse investors. Finally, Professor Babbel and Dr. Herce explain the value proposition, challenges, and future prospects for stable value funds.
To read the article, click the link below.
*The views expressed herein are the authors and do not reflect or represent the views of Charles River Associates or any of the organizations with which the authors are affiliated.
How PE firms can prepare for the DOJ’s Section 8 crackdown on interlocking directorates across portfolio companies
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