Capital preservationIncomeGrowth

What is capital preservation?

At its core, a capital preservation investment strategy focuses on preserving capital and avoiding loss. This conservative approach to investment can potentially minimise risk, but could also see smaller returns. However, this money management philosophy can potentially conserve investment value, keep pace with inflation and mitigate risk to maintain capital.

Investment objectives of capital preservation

A capital preservation model can help mitigate market volatility risk and facilitate short-term access to funds. 

This approach is often favoured by retirees, who may prefer the potential security of a low risk, low return strategy that is designed to help keep pace with inflation. Capital preservation can help investors meet their short-term goals, such as ensuring the value of retirement savings, helping with day-to-day costs, such as paying bills, enjoying leisure activities or helping their children to save for a deposit on a home.

Capital preservation does not, however, represent the best option for a longer term investment plan. In fact, over time, the exposure to risk can actually go up for longer term investment plans - see capital growth here.

This can occur because the value made through capital preservation investments are unlikely to increase enough to offset the gradual diminution of purchasing power, resulting from even moderate rises in inflation. 

This aside, a capital preservation based fund can, nevertheless, still be a valuable tool for investors pursuing longer-term growth by appropriately diversifying an investment portfolio.

AXA Investment Managers’ approach to capital preservation

We use our expert knowledge and experience in risk mitigation to help meet our clients’ capital preservation objectives. We work to achieve an effective level of investment performance, while preserving capital and helping to mitigate potential losses.

We offer a range of asset classes, from equities to commodities, and tailor solutions that can help both investors with a primary focus on capital preservation, as well as multi-asset investors seeking to offset market volatility and unexpected events by incorporating risk mitigation into a wider investment portfolio.

This page is for informational purposes only and does not constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services and should not be considered as a solicitation or as investment, legal or tax advice. The strategies discussed herein may not be available in all jurisdictions and/or to certain types of investors. Opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. No guarantee, warranty, or representation is given as to the accuracy or completeness of this material. Reliance upon information in this material is at the sole discretion of the reader. This material does not contain sufficient information to support an investment decision.