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Too Much Stability For Their Own Good?

With stocks down, 401(k) participants are opting for stable-value funds

By Staff Writer | Updated on May 01, 2002

Faced with erratic stock markets, some 401(k) plan participants are shifting to what they once considered a dull alternative–stable-value funds. But are investors pursuing the illusion of safety at the cost of long-term growth?

Experts worry that might be the case. Over the past 18 months of market tumult, there has been a significant shifting of 401(k) assets into stable-value funds and away from equities. In fact, according to Hewitt Associates, the allocation to equities in all 401(k) plans dropped to 67% from 74% between October 2000 snd February 2002, while the allocation to stable value funds climbed to 21.1% from 17%.

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