Best ETFs for Capital Preservation
Protect your principal and keep your money safe
ETFs tracked
287
Avg TER
0.69%
Median Vol 1Y
6.34%
Capital preservation ETFs exist for one reason: do not lose money. They hold the safest, most liquid instruments available (Treasury bills, short-term government bonds, money market securities) and aim to deliver modest returns with minimal price fluctuation.
These funds are not exciting, and they are not supposed to be. Their job is to be the boring, reliable part of your portfolio. When equities drop 30% in a bear market, a capital preservation ETF should barely move. When you need cash in 6 months for a down payment, you do not want it riding the S&P 500.
The primary metrics for preservation ETFs are volatility and maximum drawdown, not return. An ETF that returned 4% with 0.5% volatility is far more suitable for this goal than one returning 8% with 15% volatility. The whole point is certainty: knowing that your $50,000 emergency fund will still be close to $50,000 when you need it.
Since 2022, short-term Treasury ETFs like SGOV, BIL, and SHV have offered attractive yields (4-5%) while maintaining near-zero price risk. This is a relatively unusual environment. Rates were near zero for most of 2010-2021, and the yield on preservation ETFs fluctuates with the Fed funds rate, so what you see today may not persist.
Expense ratios matter enormously in this category. When gross yields are 4-5%, a 0.10% fee versus a 0.50% fee is the difference between keeping 98% of your return and keeping only 90%. The cheapest preservation ETFs charge 0.03-0.05%.
Who this is for
- Investors with short-term cash needs (1-3 years)
- Emergency fund holders seeking better-than-savings yields
- Risk-averse investors nearing or in retirement
Top 10 ETFs
Browse all 287 stay safe ETFs
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Open screenerFrequently asked questions
- Are capital preservation ETFs better than a savings account?
- Often yes, but not always. Treasury ETFs like BIL and SGOV have historically matched or slightly exceeded high-yield savings account rates, with the added benefit of state tax exemption on Treasury interest. However, ETFs have small bid-ask spreads and can fluctuate slightly in price, while savings accounts are FDIC-insured up to $250,000.
- Can I lose money in a Treasury ETF?
- In theory, yes. Short-term Treasury ETFs can have very small price fluctuations. In practice, the maximum drawdown on ultra-short Treasury ETFs (like BIL) has been less than 0.1% over any rolling month. The risk of meaningful loss is extremely low for short-duration government bond ETFs.
- What is the difference between a money market ETF and a short-term bond ETF?
- Money market ETFs hold instruments maturing in days to weeks (overnight repo, commercial paper). Short-term bond ETFs hold Treasuries or corporates maturing in 1-3 years. Money market ETFs have virtually zero price risk but slightly lower yields. Short-term bond ETFs may offer marginally higher yields with slightly more price sensitivity to rate changes.
Build a portfolio for this goal
Capital preservation first, modest growth second. Built to keep what you have when stocks are falling.
See the Conservative portfolio →Browse by Asset Class
Money Market→Find the best money market ETFs for cash-like yield. Compare ultra-short Treasury, floating rate, and prime money market funds.
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