Whether the money fund is guaranteed: In the impression of ordinary investors, there is absolutely no risk in investing in the money fund, and there should be no loss at any time. However, if there is no guarantee, the loss of the money fund is not only possible in theory, but also happened in practice.
Capital preservation fund
The so-called fund refers to a guarantee fund that provides 100% or more of the principal invested by investors within a certain investment period (such as 3 years or 5 years). In other words, fund investors can at least get back the principal guarantee on the maturity date of the investment period, and if the fund is successful, investors will get additional income. Judging from the operation practice of capital preservation funds in China, the average annual income of capital preservation funds is 3%-5%.
The Monetary Fund does not promise a letter of guarantee. However, if the monetary fund loses its principal, it must meet two conditions at the same time. The probability of these two extreme situations happening at the same time is very small.
First, the short-term market yield has risen sharply, and securities prices have fallen sharply. Second, the money fund has a large number of repurchases at the same time, and the types of securities with falling prices cannot expire, resulting in actual losses. With the extension of the holding period of the money fund, the probability of losses caused by market risks drops to zero. Judging from historical data, in the past ten years, there have been only a handful of cases in which the monetary fund has a deficit for one day, and there has never been a deficit for more than two consecutive days. Although it is a certificate, it is better than a guarantee.