NEW YORK (The Street) -- Conservative investors seeking to steady their portfolios in a choppy market as the Federal Reserve nears a rate hike may want to check out stable value funds, says James King, chairman of the Stable Value Investment Association.

"Participants who are invested in stable value funds can always transact at book value, which is their contribution plus accrued interest," says King. "So it's a conservative investment - although not risk free - that helps stabilize a portfolio."

Simply put, a stable value fund is a bond fund with an insurance guarantee. They have a rate of return that is comparable to intermediate term bonds and they outperform money markets historically by about two percentage points.

There is currently more than $721 billion invested in stable value funds, according to the non-profit Stable Value Investment Association. And while a lot of that money comes from Baby Boomers at or near retirement, King says millennials and Gen Xers scared by the crisis of 2008 are also using stable value funds as a safe haven for their retirement plans.

"It's good for conservative investors and investors that are nearing retirement, so if you are a baby boomer and you have a significant nest egg, if you can put a portion of your investment in stable value funds it will be protected," said King, adding that they are "very transparent and very liquid."

In terms of fees, King said they are reasonable for the peace of mind and they also offer a relatively good yield.

"It's a bond fund plus a guarantee that costs somewhere around 20 to 25 basis points," said King. "The yield at the end of 2014 for the industry as a whole was 2.46%, which at that point in time was a little higher than the 10-year Treasury bond and right in line with it now."