What are the characteristics of capital-preserved funds? Who are capital-preserved funds suitable for? Capital-preserved funds have been popular abroad for many years, because no matter whether the market goes long or short, it will not affect daily life or original plans.

Below are the characteristics of capital-preserved funds compiled by the editor. Welcome to read! What are the characteristics of capital-preserved funds? Risk control: The primary goal of capital-preserved funds is to protect investors’ principal, so a series of risk control measures will be taken.

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Fund managers will adopt more conservative investment strategies, such as selecting low-risk assets and strictly controlling leverage ratios, to minimize investment risks.

Fixed-income investment: The investment portfolio of a capital-guaranteed fund is usually dominated by fixed-income assets, such as bonds, money market instruments, etc.

These assets have relatively low risks and stable returns, helping to maintain capital growth.

Capital Guarantee Commitment: Most capital guarantee funds provide investors with a capital guarantee commitment, that is, within a certain period of time, they guarantee that the investment principal will not be lost due to market fluctuations.

The capital guarantee commitment may contain certain conditions and restrictions, and investors need to read the fund contract and related documents carefully.

Capital guaranteed funds are suitable for those who pursue capital preservation: Capital guaranteed funds are suitable for those who attach great importance to the preservation of investment principal and hope to reduce investment risks and protect principal.

They pay more attention to the safety of capital and have a relatively low pursuit of return rate.

Conservative investors: Capital-guaranteed funds are suitable for investors with lower risk appetite. They are accustomed to relatively stable investment income and can accept relatively low return levels.

They prefer to reduce risk in their investments rather than bear greater investment volatility.

Shorter-term investors: Capital-guaranteed funds usually have certain requirements on the investment cycle, so they are suitable for those who have shorter-term investment plans.

They may have some short-term funding needs or may not have a high risk tolerance for long-term investments.

What is a capital preservation fund? Capital preservation funds achieve “capital preservation” at the expense of possible returns and can show good stability in a bear market.

Capital-guaranteed funds mainly invest most of the principal in fixed-income investment tools such as time deposits, bonds, notes, etc., and usually have a capital-guaranteed cycle (a lock-in period set by capital-guaranteed funds, which in my country is generally 3 years, even 7 to 12 years in foreign countries). After the capital guarantee period, we can get back the original investment principal, but if we redeem it early, we will not enjoy preferential treatment.

When the stock market is uncertain, capital preservation funds are a good choice for investors with weak risk tolerance.

Capital-guaranteed funds usually aim at maintaining capital and increasing value. They mainly invest in securities with low risk, high dividends and high returns to ensure that investors can receive principal plus income upon maturity. Generally, they can obtain higher than bank deposit interest over the same period.

Return.

Capital-guaranteed funds generally stipulate a certain closing period, so they are "semi-closed" open-end funds.

The selection principle of capital-guaranteed funds is the capital-guaranteed amount: the capital-guaranteed amount is negatively correlated with investment income, that is, a high capital-guaranteed amount means a low investment income amount; on the contrary, if the capital-guaranteed amount is low, the corresponding probability of obtaining higher investment income is also

large, but the relative risks are also magnified.

It is recommended that investors choose which capital-guaranteed fund to invest in based on their risk tolerance.

Fund managers: High-quality and professional fund management companies and investment research teams are the guarantee for the good operation of fund investments and are the key factors that determine the profitability of capital-guaranteed funds.

When choosing a capital-guaranteed fund, you should carefully read the introduction to the fund management company and company executives in the capital-guaranteed fund prospectus, as well as the professional background and experience of the proposed fund manager.

Timing of entering the market: Capital preservation funds have good resilience and can effectively avoid systemic risks in the stock market. When the stock market is down or volatile and investment returns cannot be well guaranteed, capital preservation funds are undoubtedly a better choice.

rates.

The fees for capital-guaranteed funds mainly include subscription/subscription fees, redemption fees, management fees and custody fees.

Generally speaking, the fee rate is often related to the length of the fund holding period. The later the fund is redeemed, the lower the fee rate.

The method of realizing capital preservation for a capital-guaranteed fund assumes that the initial scale of a capital-guaranteed fund is 1 billion yuan, and it ultimately needs to ensure that the assets will not be less than 1.01 billion yuan after 3 years.

In order to achieve the goal of capital preservation, the fund manager will calculate how much assets need to be used to maintain capital based on the interest rate of three-year time deposits in the market.

At present, the three-year regular interest rate is 4%. Based on this income level, if the assets reach 1.01 billion yuan in three years, only 898 million yuan of investment is needed to achieve the goal of capital preservation.

The extra 102 million yuan can be used to invest in high-risk assets such as stocks. Even if all these assets are lost, the goal of capital preservation can be achieved.

In addition, the fund company will also introduce a guarantee mechanism so that the initial principal and subscription fee can be returned to investors at the end of the capital guarantee cycle.