Money funds have always been welcomed by investors because of their low risk, stable expected returns and good liquidity. The money fund with high security is not guaranteed, and the investment is at risk of loss. Today, we will talk about the risks of the money fund and see under what circumstances the money fund will lose money.

I. Loss of monetary funds

The risk level of the money fund is low, and losses will only occur if the following two situations occur at the same time.

1, the market interest rate rose sharply in a short time, which led to a sharp drop in securities prices;

2. There are a lot of redemptions at the same time, and investors sell bonds when they can't hold bonds with falling maturity prices, resulting in losses.

Second, the possibility of monetary fund losses.

Although the money fund is losing money under certain conditions, it is very unlikely that the decline in securities prices and the massive redemption of the money fund will happen at the same time, so the probability of the actual loss of the money fund is extremely low. Judging from the history of the money fund, there is almost no situation in which someone invested in the money fund but lost the principal.

In addition, the investment scope of money funds is mostly in low-risk areas such as cash, bank deposits, bonds and central bank bills. The high security in the field of asset allocation can also show that the possibility of money fund losses is not great.

Conclusion: The expected returns of money funds are all expressed by seven-day annualized expected returns, and the previous expected returns cannot represent the expected returns that can actually be obtained in the future. Therefore, in addition to the loss of principal, there is also the risk that investing in money funds may not be able to obtain the expected expected return.