What are the precautions for capital preservation funds
Capital preservation funds are not suitable for purchase at any time. The following small series will tell you what are the precautions for capital preservation funds?
Precautions for capital preservation funds 1. Not all capital preservation funds can be purchased at any time
Is it possible to ensure the safety of the principal no matter when the capital preservation fund is purchased? The answer is no. Capital preservation promises of capital preservation funds can be divided into subscription capital preservation and subscription capital preservation. Capital preservation funds all have a capital preservation period, which is generally three years in principal guaranteed fund, China. Among all capital preservation funds in the current market, only Southern Hengyuan makes a commitment to subscription capital preservation, and the rest make a commitment to subscription capital preservation. To put it simply, these capital preservation funds can only enjoy the capital preservation treatment if the investors buy the shares at the time of raising, but they can't enjoy the capital preservation if they buy the shares at the time of opening the subscription later. For investors, if they want to protect the capital, they can only consider purchasing the capital preservation fund in the raising period.
Precautions for capital preservation fund II. Redemption without capital preservation in advance
When the stock market plummets, the capital preservation fund will also suffer periodic losses. For example, the only six capital preservation funds a few years ago lost money across the board in the first five months, and one of them lost 7.64%. At that time, should I redeem the capital preservation fund? Experts pointed out that even if there is a loss, it is best not to redeem the capital preservation fund in advance, because it cannot guarantee the safety of the principal. The fund company's commitment is to provide a capital preservation commitment only for the fund assets subscribed during the raising period and held by the fund assets whose capital preservation period expires. If the investor redeems the fund because of the urgent need for funds, the investment principal will not be guaranteed.
Precautions for capital preservation funds III. Penalty rate for early redemption
The share changes of capital preservation funds are relatively small, somewhat similar to closed-end funds. Therefore, the capital preservation foundation invests most of its money, unlike open-end funds, which always leave a sum of cash to deal with redemption, but it will be more passive when redemption occurs. Therefore, for the investment redeemed in advance, the redemption rate of the capital preservation fund is relatively high, which has a certain punitive nature. For example, if the holding period is more than one year and less than 1.5 years, the redemption rate of CCB Capital Protection is 1.6%, and Huitianfu Capital Protection is 2%.
however, if it is held for more than 1.5 years and less than 3 years, the principal-guaranteed rate of CCB is 1.2%-1.6%, while that of Huitianfu is reduced to 1%. Therefore, if you invest in a capital preservation fund, you'd better be prepared to fight a "protracted war", which will generally last for more than three years. Recently, however, China's first one-year capital preservation fund "China Resources Yuanda Capital Preservation Fund" has been issued, breaking the limitation of three-year holding period.
We should pay attention to arranging the proportion of fund varieties according to our risk tolerance and investment purpose. Choose the fund that suits you best, and set an investment ceiling when buying partial stock funds. Never buy the wrong "fund". The popularity of funds has led to some fake and inferior products "fishing in troubled waters", so we should pay attention to identification.