Monetary Fund: A 'Safe Harbor' for Conservative Investors
Monetary fund: the "safe haven" of conservative investors is mainly invested in short-term monetary instruments, such as treasury bond, central bank bills, commercial bills, etc. These objects have high credit rating and strong liquidity, which makes the monetary fund have the characteristics of "quasi savings". Taking Yu'ebao as an example, as a typical money market fund, users can deposit and withdraw funds on demand, with daily settlement of returns and minimal fluctuations in returns. The data shows that the average annualized return of money market funds in the past five years has been between 2% and 3%. Although it is not high, its advantage lies in its strong stability. When the market is volatile, many investors will transfer some of their funds to money market funds for hedging, and wait for the market environment to improve before making other investments. Monetary funds also have tax incentives, dividend income is exempt from income tax, suitable for conservative investors, short-term idle funds, and as liquidity reserves in asset allocation.
