Principal-Protection Fund

(redirected from Principal-Protection Funds)

Principal-Protection Fund

A mutual fund that invests predominately or exclusively in securities with principal protection, meaning holders are guaranteed to receive back at least what they originally invested. This results in a low risk mutual fund. However, principal-protection funds often have relatively low returns and, if the fund invests in a disproportionate number of short-term securities, can lead to higher capital gains taxes.
References in periodicals archive ?
The September issue of Morningstar(R) FundInvestor(TM), a monthly newsletter for individual investors, highlights the benefits and drawbacks of two guaranteed products: Stable-value funds and principal-protection funds.
mutual fund analyst Brian Portnoy helps investors understand the intricacies of both investments and compares stable-value funds to principal-protection funds.
Stable-value funds can make sense, but principal-protection funds are largely folly.
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