At present, all funds, including the three funds, can not be said to be capital preservation in a strict sense. According to the degree of risk, the order of funds is: stock type > hybrid type > bond type > shop around, and the return is just the opposite.
Money fund contracts generally do not guarantee the security of the principal, but in fact, due to the nature of the fund, the loss of the principal of the money fund rarely occurs in reality. Generally speaking, money funds are regarded as cash equivalents.
The two major factors that affect the performance of bond funds are interest rate risk, that is, the sensitivity of the bonds invested to interest rate changes (also known as duration). The second is credit risk. When choosing a bond fund, we must understand its interest rate sensitivity and credit quality.
In addition to investing in bonds, bond funds also invest in stocks, so there are certain risks, but not too big.