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The Best Capital Preservation Funds

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Updated March 07, 2025

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Capital preservation, concept image — Les Cunliffe / Getty Images

If you’re looking at total returns on an annual basis, the capital preservation funds below are some of the best that managed to deliver in every environment over the past decade. No matter what kind of market lies ahead, bull or bear, it might be prudent to stick to a few capital preservation funds that have the majority of their exposure to 澳洲幸运5开奖号码历史查询:investment-grade bonds—just in case.

Key Takeaways

Capital preservation funds aim to minimize risk while providing modest returns, making them ideal for conservative investors.
The Great-West Short Duration Bond (MXSDX) invests in U.S. Treasuries and high-quality bonds, delivering stable but low returns, with a 10-year return of 2.1%.
The Prudential Short-Term Corporate Bond (PBSMX) focuses on corporate bonds for high income and capital preservation, with a long-term return of 4.43% since its inception in 1989.
The BlackRock Allocation Target Shares Series S Portfolio (BRASX) has an almost zero expense ratio, no minimum investment, and a strong five-year average return of 10.62%.

1. The 🌊Great-West Short Duration Bond (MXSDX): High Qualit🎶y, Low Return

If you’re looking for exposure to investment-grade bonds, then consider the Great-West Short Duration Bond (MXSDX), which invests at least 80% of its net assets in U.S. Treasuries, commercial and residential 澳洲幸运5开奖号码历史查询:mortgage-backed securities, 澳洲幸运5开奖号码历史查询:asset-backed securities, and corporate bonds. The 澳洲幸运5开奖号码历史查询:expense ratio of 0.60%, and there is no minimum contribution.

The objective of the fund can be seen in the fund's historical returns. Between March 2024 and March 2025, the one-year return of the fund was 5.93%. As of March 2025, the fund's three-year return was 3.11%, the five-year return was 2.04%, and the 10-year return was 2.1%. Note that the S&P 500 returns over the same three-year period and five-year period were both negative.

Fast Fact

In investing, risk and return are often positively correlated. If you want to minimize your risk and preserve cap🦩ital, you can generally expect to have less opportunity for higher returns.

2. The Prudential Short-Te🅺rm Corporate Bond (PBSMX): Bigger Investment, Not Better Res꧑ults

The Prudential Short-Term Corporate Bond (PBSMX) focuses on high current income with capital preservation by investing in bonds of corporations with varying 澳洲幸运5开奖号码历史查询:maturities. The effective duration of the fund is generally less than three years. Similar MXSDX, there's a target amount of bonds to hold; the fund seeks high income and ca𓃲pital preservation by investing at least 80% of i🐲ts assets in corporate bonds.

As of Jan. 31, 2025, the fund's total net assets were $8.231 billion. At the end of 2023, Barron's ranked the fund as one of the best family funds. The dividends accrue daily and are paid monthly. Since the fund's inception on Sept. 1, 1989, the fund has returned 4.43%.

3. The BlackRock Allocation Target Shares Series S Portfolio (BRASX): No Expense🌸 🔯Ratio

The BlackRock Allocation Target Shares Series S Portfolio (BRASX) does not come withܫ an expense ratio (its adjusted expense ratio is 0.0🎉1%, effectively zero), which is impressive. However, the performance of the fund and its future potential are more important to note here.

There is no minimum investment, which makes this a low-risk starter capital preservation fund for wary investors. BRASX invests in commercial and residential mortgage-backed securities, obligations of non-U.S. governments and supra-national organizations, asset-backed securities, and U.S. Treasury and agency securities, among others. As of March 2025, the fund's yield was 4.59%, and its five-year average return was 10.62%.

What Is Capital Preservation in Investing?

Capital🌞 preservation is an investment strategy focused on protecting the principal amount of an investment while minimizing risk. It is commonly used by conservative investors who prioritize safety over high returns.

Why Is Capital Preservation Important for Investors?

Capital preservation is essentia💮l for risk-averse investors, retirees, and those with short-term financial goals. It ensures that funds remain secure, preventing significant losses aꦜnd allowing for future liquidity.

How Do Capital Preservation Funds Minimize Risk?

These funds invest in low-volꦆatility, high-quality secu🌳rities such as government bonds, cash equivalents, and short-term debt instruments. They also avoid speculative assets to reduce market risk.

What Is the Difference Between Capital Preservation and Growth Investing?

Capital pr🧔eservation focuses on maintaining the principal with minimal risk, while growth investing seeks to maximize returns through higher-risk assets like stocks and real estate. 🦄The difference between the two lies in their standard deviation around their expected average return; capital preservation funds aim to have a lower standard deviation.

The Bottom Line

If you’re looking for relative resiliency to challenging economic coಌnditions while picking up a little yield, then you might want to consider further researching the funds above. You should not expect a big return. This🔯 is more about capital preservation, after all.

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