U.S. stock markets are reeling, and retirement savers are fleeing to an interest-bearing, safe corner of their 401(k) in search of safety. The major averages have been in a tailspin since President Donald Trump rolled out his ” reciprocal ” tariffs on April 2. Since then, the S & P 500 has fallen almost 10% as investors grapple with uncertainty around trade policy and its implications for economic growth, inflation and corporate profits. Stocks sold off again on Monday, with the Dow Jones Industrial Average tanking about 1,300 points at the session low, after Trump escalated his attacks on Federal Reserve Chairman Jerome Powell, calling him a ” major loser ” and sparking worries of what would happen if the president sought to remove the central bank chief and compromise the Fed’s independence. Though retail investors have been buyers during these rocky stretches, retirement savers have been more jittery. .SPX 1M mountain The S & P 500 over the past month In March, large-cap U.S. equity funds in retirement plans saw $548 million in outflows, while investors yanked $329 million from target date funds – professionally managed funds that offer equity and fixed income exposure and become more conservative over time, according to the Alight Solutions 401(k) Index . Plan participants poured money into what are perceived to be safer corners of the market, with $367 million heading toward stable value funds last month. Bond funds brought in $245 million, while money market funds attracted $178 million, according to Alight, a retirement plan service provider. “March was the busiest month for trading activity since October 2020; people were fleeing from stocks and going into bonds, stable value and fixed income,” said Rob Austin, head of thought leadership at Alight. Although these savers were likely trying to stanch the bleeding from their 401(k) plans, at its core, this sprint to safety is just market timing, he added. “Don’t be fooled by investment risk and not consider inflation risk,” Austin said. “You might not see your account value go down, but inflation continues to be high: Will you outpace that enough to keep your portfolio growing?” Know safety Money market funds have garnered lots of attention for their attractive yields as the Federal Reserve keeps interest rates high. The Crane 100 Money Fund Index has an annualized seven-day current yield of 4.14%. They’re available to both retail investors and retirement plan participants. Stable value funds, however, are offered only in retirement plans. These funds are essentially a portfolio of short- and intermediate-term bonds with an insurance “wrapper” that protects investors’ principal and accumulated interest. Stable value funds pay a ” crediting rate ” on investors’ savings. It can be based on several factors, including the value of the underlying portfolio and its yield and duration. Offerings available in the 401(k) market include the John Hancock Stable Value Return Trust and MissionSquare PLUS Fund. The funds had respective crediting rates of 3.46% and 3.35% as of the first quarter, according to Morningstar Direct. “They have provided returns that are in excess of money market funds, and you don’t have the volatility of the bond portfolio,” said Michael Conrath, chief retirement strategist at J.P. Morgan Asset Management. “In retirement, I look at it through a long-term lens, and that is how many participants ought to view it as well.” See below for data on a few stable value funds in the 401(k) space, per Morningstar Direct. Some $841 billion was invested in stable value funds as of the end of 2024, according to the Stable Value Investment Association (SVIA). “When you talk about this period of volatility leading to significant inflows, it’s a trend we have seen for quite a few years,” said Zach Gieske, president of the SVIA. “We saw it in 2022 and in the Covid pandemic, these inflows coming in and then money going back out when the market improves.” Best use of stable value While stable value offers investors a measure of protection from the turbulence in stocks, savers with an eye on retirement risk bailing from stocks at the worst time – and missing the recovery – if they attempt to trade their 401(k) balances with these funds. “People are way quicker to move out of the market than they are to move back in,” said Jania Stout, president of Prime Capital Retirement & Wellness in Overland Park, Kansas. “There is definitely a misperception that at least they didn’t lose their money, that they’re OK – but when we quantify how much they didn’t make because they were on the sidelines? That’s the risk.” Before you make dramatic decisions with your retirement plan savings, consider reviewing your long-term horizons and goals. As attractive as principal protection may sound, your retirement savings likely won’t keep up with inflation if it’s all in stable value. You might already be in an investment option that’s diversified with your retirement date in mind: Target-date funds aim to lower equity exposure as investors near retirement, but savers will need to avoid knee-jerk reactions when the market grows more turbulent. “I feel like because of target date funds and the rise of advisor-managed accounts, [savers] feel like they have a diversification strategy,” Stout said. For those who are close to retirement or already in retirement, stable value can help lower market risk and complement other assets in an investor’s portfolio, such as dividend-paying stocks, she added. “It can be a good risk mitigator if you have already built your nest egg and you’re trying to maintain it,” said Stout. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. 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