The Wall Street Journal writes on "What Some Investors Don'​t Understand About Stable-​Value Funds." It says, "​Most retirement plans offer stable-​value funds on their menu of investment options as a means of capital preservation. But the structure of these funds can make them more volatile, less liquid and less appropriate as a cash alternative than some investors realize. Commonly characterized as an alternative to traditional money-​market funds, stable-​value funds actually are more akin to bond funds, investing in similar short- and intermediate-​term fixed-​income securities. They are different from bond funds in that a series of insurance contracts insulate them from interest-​rate fluctuations in the bond market, making their returns more consistent. If the securities in a stable-​value fund return less than promised in the contract, the insurer pledges to cover the difference. While this insurance wrapper might provide clients with confidence in their investment, it also means the price of the fund doesn'​t reflect what'​s happening with the underlying securities. And should the insurer find itself in a position of insolvency during a market downturn, the contract would be worth the value of the underlying assets, which might be less than the investor believes. While stable-​value funds can return more than a money-​market fund, the insurance wrapper also puts a cap on the fund'​s upside." The piece adds, "For some investors, a high-​quality bond fund may be more appropriate. In addition to a portfolio of high-​quality, shorter-​term bonds, these funds offer far more transparency in terms of investments, fee structure and pricing."

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