"During a booming market, stable value funds hold little appeal for investors accustomed to reaping sky-high returns from stocks and mutual funds," said Aruna Hobbs, director of business development and head of the stable value unit for AEGON Institutional Markets in Louisville.

"But as a diversified core holding, stable value can help reduce the sting in a market downturn. Smart investors use stable value funds to ride out the bad times," Hobbs said.

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