kapitalbevarande

Kapitalbevarande, or capital preservation, is an investment objective that prioritizes protecting the nominal value of capital and limiting downside risk. It is common among risk-averse investors, retirees, and funds with short-term horizons, where the aim is to avoid loss rather than maximize growth.

Strategies typically include a high allocation to low-risk assets such as cash, money market instruments, government bonds, and high-grade corporate bonds, often with short durations. Diversification, laddered maturities, and cautious use of inflation-linked or hedging assets may be employed. Some products offer capital protection features, either through guarantees from financial institutions or structured instruments, which can provide principal protection at maturity but may involve credit risk and higher costs.

Trade-offs: While capital preservation reduces drawdowns and volatility, it generally yields lower long-term returns and may fail to keep up with inflation. Liquidity can be affected by certain guarantees or structured products, and fees/credit risk are important considerations. Regular reviews and rebalancing are common to maintain the target risk level.

In practice, capital preservation is used in personal portfolios with low risk tolerance, in pension or insurance portfolios, and as a defensive stance within broader investment strategies. The term is widely used in Swedish financial literature as kapitalbevarande to describe approaches or funds aimed at protecting principal.