Are there any non-decreasing securities on the stock market?

Question

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).

D Stanley · Accepted Answer

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).

JimmyJames · Answer

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.

nanoman · Answer

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.

Flux · Answer

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.

Are there any non-decreasing securities on the stock market?

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