Investors flocked to stable value funds in an effort to smooth volatility experienced in August, apparently seeing them as a higher-yielding alternative to money markets.
Bloomberg reports Galliard Capital Management's stable-value funds saw more than four times the usual inflows in August as market volatility increased. Investors in retirement plans administered by Wells Fargo & Co. moved $850 million into the funds that month, and Aon Hewitt, a benefits manager, had $1 of every $5 transferred by plan participants put in a stable-value fund.
But the news service warns that while the funds recently have outperformed the stock market, "investors should realize they're riskier than money funds, and may contain restrictions on transfers and withdrawals."
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