Are there any securities traded on the stock market (i.e. ETPs) that never decrease in value?

As an aside (in case anyone mentions bonds):

I'm aware there's ETFs for AAA-rated government bonds, but even these dip significantly.

For example, the IGLT (iShares UK GILTs ETF) has dipped by 9% in a 85-day period before (21/08/2016 to 13/11/2016).

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    Cheeky answer: yes. Whatever you use as the benchmark to define “value” will by definition never decrease in value. Eg: if you define value by how many US dollars something is worth, then holding x US dollars today will ensure you have x US dollars tomorrow. Likewise if you value things by gold - then gold will never drop in ‘value’ (1g of gold today will be 1g of gold tomorrow). Ceteris paribus, of course. :) – Lawrence Mar 13 '19 at 12:06
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    Good point -- secretly everything's moving. By holding cash in GBP because I anticipate a downturn in the SP500, I'm implicitly betting the GBP is the currency that's most likely to go up compared to all other currencies and assets... I don't, but somehow taking no action feels more sensible than an uneducated bet! :D – Lawrence Wagerfield Mar 13 '19 at 14:11
  • Do you mean something that never decreases in value each day, or just never drops below what you paid for it? – DJClayworth Mar 14 '19 at 1:22
  • @DJClayworth in terms of assets bought & sold via a stock exchange, I think both of those statements are the same. I.e. if there's an asset that potentially decreases on any given day, it's impossible for you to buy and sell at any point in time without it potentially dropping below what you paid for it, no? I appreciate that bonds purchased directly from companies are different, but I'm referring to things you can purchase from a stock exchange. – Lawrence Wagerfield Mar 15 '19 at 8:09
  • I ask because it is possible to buy assets that are guaranteed to never decrease below the price you paid for them. Typically every year they are given a new value and are then guaranteed to never decrease below that. They are not of course traded on the stock market. – DJClayworth Mar 15 '19 at 13:20

There are none that I am aware of that never drop in value. There are investments that are virtually risk free, like US government bonds, but those are only risk free if you hold them to maturity, meaning you are guaranteed to get your money back plus interest so long as the US government does not default (which is virtually 100% certain).

However, even those bonds drop in value if underlying interest rates go up. If you buy a 5% T-bill and the equivalent interest rate rises to 6%, your bond is now worth less since investors can instead buy a 6% bond instead of your 5% bond. You're still guaranteed to get a 5% return, but the current value is lower (you can get a better return with other investments). So even risk-free instruments can drop in value during their lifetime.

Even cash will drop in real value during times of inflation (a $100 bill buys less today than it did 5 years ago).


The closest thing would be a very short-term, high-quality bond fund that approximates a money market or bank account (the problem with IGLT that the bonds are not short-term). Two such ETFs, both launched in 2007, are SPDR Bloomberg Barclays 1-3 Month T-Bill (BIL) and iShares Short Treasury Bond (SHV). These do a good job of preserving capital (in nominal US dollars).

They are not literally non-decreasing, and their future performance is not guaranteed, but their historical behavior comes close to what you are asking for. On a daily total return basis (with reinvested dividends), the greatest drawdown (peak-to-trough loss) seen over any period in the 12-year history is about 0.8% for BIL and 0.4% for SHV.


The short answer is that the market pays you for risk i.e. no.

That might be confusing considering the idea of the 'risk-free' rate attributed to things like US treasury bonds as mentioned in D. Stanley's answer. That term refers to the risk of default which isn't exactly 0 but pretty close given that the government can always print more money to pay its debts. There's still the risk of losing access to your cash and having the bonds become less valuable.

There are things like inflation-indexed securities that may be something you want to consider which guarantee a 'real' return based on an estimate of inflation.

  • But if the government prints more money, it lowers the value of each dollar, which means that even though you get the stated $X for your T-bill at maturity, you can buy less with it than you expected to be be able to. – jamesqf Mar 12 '19 at 17:05
  • @jamesqf Exactly right. I considered delving into that as another way that 'risk-free' is about default, but not risk-free in terms of value loss. I decided against it but definitely a salient point. – JimmyJames Mar 12 '19 at 17:21

If you buy a target-maturity treasury bond ETF with positive yield to maturity, and if you hold until the liquidation date, the value you get on liquidation is guaranteed to be more than what you put in (in nominal terms). Example of target-maturity bond ETF that holds treasury bonds: iShares iBonds Dec 2029 Term Treasury ETF (NASDAQ: IBTJ).

Between now and the liquidation date, the value of the ETF might drop in response to increases in interest rates, but on the liquidation, the value won't less than what you paid for (in nominal terms). That's why you must hold to maturity for the non-loss guarantee to hold.

If you aren't restricted to the stock market, and you have access to the options market, you can look into principal-protected notes. These can be easily constructed during times of low market volatility by using a high-quality bond and a call option.

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