Trying to understand more about risks of Money Market Fund, Fullerton SGD/ CSOP USD: Is it possible to lose capital parked in Money Market Fund?

As with typical investments (other than SG Govt backed Singapore Savings Bonds and Singapore Government Security Treasury Bills (also known as SGS T-Bills), other form of investment products do carry a certain percentage of risk that has to be considered, before you put your hard-earned cash into the investment tool (or fund).

The answer is yes, you can lose money while investing in Money Market Fund. Though it's rare, there have been instances where the NAV of Money Market Funds "breaks the buck" and falls below $1 due to defaults or fluctuations in the underlying assets.

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Some reasons might include:

1. Money Market Funds invest in short-term debt securities issued by governments, banks, or corporations. These securities carry a certain level of credit risk. If one of the issuers defaults on its obligations, it can lead to a decline in the fund's NAV and result in potential losses for investors.
2. Money Market Funds invest in short-term fixed-income securities, and their returns are sensitive to changes in interest rates. If interest rates rise, the value of existing fixed-rate securities may decrease, leading to a decline in the fund's NAV and potential capital losses.

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Regarding what negative returns mean, it means that you will not get any interest or even lose some money that you gain previously.