capital guaranteed fund

an investment fund which guarantees that the capital (the original amount invested) will be returned to investors. The guarantees vary from fund to fund, and some have restrictions. A capital guaranteed fund will often invest primarily in low-risk assets, such as cash and fixed interest investments. However, if sufficient reserves are available, a fund may invest in higher risk assets. The fund may attempt to smooth returns over time by increasing reserves when the actual returns of the underlying investments are high and drawing down on reserves when the actual returns are low or negative. The interest rate declared on capital guaranteed investment therefore does not necessarily reflect the performance of the underlying assets in the short to medium term. The opposite extreme to a capital guaranteed fund is a market-linked fund.