Stable Value Popularity Continues

The market may be recovering and equity fund investing perking up, but stable value is still popular if sales at AEGON Institutional Markets are any indication. The company reported an increase in sales totaling $6.3 billion in the first six months of 2003, a 12.5% increase from the $5.6 billion worth of stable value products it sold in the same period in 2002.

"I believe the continued strong interest in stable value products indicates investors do realize that a core stable value investment is a sound, long-term choice for growth and safety for any portfolio in any financial environment," said Aruna Hobbs, head of the pension and savings group for AEGON Institutional Markets.

Stable value allocations within 401(k)s are up to 27%, almost double their level of 17.5% two years ago, according to Hewitt Associates. Stable value has now overshadowed both company stock and large-cap equity investments in 401(k)s.

Regardless of investors’ risk profile, stable value now has an important role to play in asset allocation, Hobbs said. "After experiencing the effects of a three-year bear market, investors are finding they are better served in almost any asset allocation, from conservative to aggressive, by putting a portion of their portfolio into stable value. In fact, having stable value in their portfolio allows investors to be more aggressive in some of their other investments."

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