Caps (In Investment Growth)

Caps in investment growth are constraints set on the appreciation potential of an investment, often seen in fixed-indexed annuities or certain types of structured products.

These caps limit the maximum percentage an investment can earn in a given period, even if the underlying index or asset experiences greater growth.

Caps are intended to moderate investment risk by providing a safeguard against market volatility. While they restrict the potential for high returns during bullish market periods, they also commonly include a floor or a guarantee that shields the investor from losses beyond a certain point.