Capital Guarantee Fund

Dictionary Says

Definition of 'Capital Guarantee Fund'

An investment in which the investor's principal is shielded from losses. With a capital guarantee fund, any losses experienced by the underlying investments are absorbed by the fund company, which tends to invest the majority of fund capital in very conservative securities to help minimize the likelihood of losses, a move that also limits return.

Also called a "capital-protected fund."
Investopedia Says

Investopedia explains 'Capital Guarantee Fund'

Capital guarantee funds are low-risk, but also low-return. A fund may require that an investor remain invested for a set number of years, as many of the underlying securities are bonds that need time to reach maturity and, subsequently, repay principal. The return on these funds can be higher than savings account or money market returns. Fund managers, in order to minimize the fund's risk of absorbing losses, will keep the majority of underlying assets conservative in vehicles such as bonds. They may invest a small percentage in high-risk equities.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Mutual Fund

    An investment ...
  2. Principal

    1. The amount ...
  3. Principal-Protected Note - PPN

    A fixed-income ...
  4. Conservative Investing

    An investing ...
  5. Fixed Income

    A type of ...
  6. Smart Money

    Cash invested or ...
  7. Risk

    The chance that ...
  8. Fund Of Funds

    A mutual fund ...
  9. Risk Capital

    Investment funds ...
  10. Event Risk

    1. The risk due ...

Articles Of Interest

  1. Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  2. Build A Model Portfolio With Style Investing

    This sophisticated approach will add flair to your returns.
  3. 12b-1: Understanding Mutual Fund Fees

    Many mutual funds charge investors a 12b-1 fee to pay for marketing and promotion expenses.
  4. Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  5. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
  6. The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  7. Tips For CFPs Looking To Building A Portfolio For Clients

    Here is some useful advice for CFPs when it comes to building portfolios for clients.
  8. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  9. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  10. 5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center