Capital protection is a strategy used in investing where the primary goal is to preserve the original capital, ensuring that at the very least, the amount invested is not lost. This is typically achieved through a mix of debt and equity investments, with a larger portion allocated to low-risk debt instruments to safeguard the principal amount.

Capital protection funds are a type of mutual fund that focus on protecting the invested capital against market risks. They are usually close-ended, meaning they have a fixed maturity period, and invest a significant portion of their assets in high-quality bonds and fixed-income securities to ensure the return of the principal amount at maturity

It’s important to note that while capital protection funds aim to protect the initial investment, they are not entirely risk-free and do not guarantee returns, as the equity portion can still be subject to market fluctuations. Always consider consulting with a financial advisor to understand if such investments align with your financial goals and risk tolerance.