Money market funds do not promise that the principal will not lose money at any time, nor do they guarantee the minimum expected annualized rate of return. Generally speaking, when the following two conditions are met at the same time, the money market fund may lose its principal: first, the market expects the annualized rate of return to rise sharply in the short term, resulting in a sharp drop in securities prices; Second, the money fund redeemed a large number at the same time, unable to hold bonds with falling maturity prices, and caused actual losses after selling bonds. According to relevant calculations, the probability of a single-day principal loss of money market funds is very small (0.06 1 17%). If you hold it for a week or a month, the probability of principal loss is close to zero. With the extension of holding period, the loss probability caused by market risk will be very low. However, domestic monetary funds are not allowed to invest in stocks, convertible bonds, corporate bonds below AAA level, so the probability of credit risk is low.
Generally speaking, there is almost no risk in money funds, but from another perspective, sometimes no risk is the biggest risk. Because his expected annualized expected return is limited, but his liquidity is good and he is unlikely to lose money. If you have more spare money, you can allocate some money funds from the perspective of sound financial management. When the stock market is good, turn the money fund into an open-end fund; When the stock market is bad, turn open-end funds into money funds. In this way, we can advance, attack and retreat. If you are not interested in the stock market. Then the money fund can be said to be quite stable.
On the whole, the money fund can be said to be the least risky of all funds, and the expected annualized expected return is still considerable in the long run.