Why can money funds protect capital?
The key of monetary fund's capital preservation is the security of the investment object, and the investment object does not lose money. Monetary funds mainly invest in short-term monetary instruments, such as treasury bonds, central bank bills, commercial bills, bank time deposits, government short-term bonds, corporate bonds, interbank deposits and other short-term securities.
Except for the different investment targets, money funds are the same as other funds in trading. Monetary fund is an open-end fund, which is operated by fund managers by raising idle funds from the society. It specializes in investing in low-risk money market instruments. Monetary fund has the characteristics of high security, high liquidity, stable income and quasi-saving.
For investors, money funds are natural havens. Under normal circumstances, it can not only obtain the income higher than the interest of bank deposits, but also ensure the safety of the principal. Therefore, money funds have always been very popular, but there are few money funds on the market.
After reading the above introduction, I believe everyone has a better understanding of why money funds can protect capital. If you are a novice or an investor who doesn't want to lose a penny, I suggest you buy a money fund. If you want to earn more, you can consider bond funds and equity funds, but at the same time you need to bear the possibility of losses.