If Mark Twain were a defined contribution (DC) participant, chances are he would keep some of his savings in a capital preservation strategy. “I’m more concerned with the return of my money than the return on my money” is one of his most famous (and oft-misattributed) aphorisms.
It is a common sentiment, and it explains why capital preservation strategies are among the most popular offerings in DC plans. As their name implies, these approaches seek to help participants preserve invested principal; return is a secondary priority. They also can serve an important role in portfolios by potentially generating income, providing liquidity or offsetting riskier investments.