Question about "cash" allocation in my retirement plan.

[explodingdust]

In my employer retirement plan, I have two options for the cash portion of my PP. The first is Pimco Low Duration (PLDAX), which appears to invest in mostly short-term mortgage assets and treasuries and yields 2.5% right now. It would carry slightly more risk but still seems pretty safe. The other is a guaranteed fixed fund that currently yields 3.5%, which seems pretty good. I'm not sure what the better choice is HELP!

[craigr]

I need to research these funds, but yields that high for short term debt indicate to me that some big risks are being taken. I need to double check, but those look like junk bond rates to me. PLDAX has very high expense ratio as well. Do you need to put your cash in this plan or can you fill it with bonds first?

[explodingdust]

The only other bond fund my plan offers is Pimco Total Return, which doesn't really fulfill my need for a long-term bond so I am going to open a separate roth ira to satisfy that requirement as well as the gold requirement. But back to my cash dilemma, PLDAX according to the prospectus puts 59% in mortgage backed securities, 18% in treasuries, and 8% in investment-grade credit. You can read the prospectus here: http://investments.pimco.com/Products/p ... Code=admin. I'm not sure how this fund would perform under specific market conditions but it seems pretty conservative overall. The stable value fund that my plan offers is returning 3.5% right now, which is pretty decent and without any real risk, although a little bit of extra risk doesn't really bother me.