Mutual Fund Risk Awareness

Why Risk Awareness Matters

Every mutual fund investment carries some degree of risk. Understanding the broad categories of risk helps investors set realistic expectations and read scheme documents with more confidence.

Market Risk

Market risk refers to the possibility that the value of underlying securities, such as equities or bonds, may fluctuate due to overall market movements, economic conditions or sentiment.

Credit Risk

Credit risk applies mainly to debt instruments and refers to the possibility that an issuer may delay or fail to meet interest or principal repayment obligations.

Liquidity Risk

Liquidity risk is the risk that an investment cannot be bought or sold quickly enough, or at a fair price, particularly during periods of market stress.

Interest Rate Risk

Interest rate risk primarily affects debt-oriented schemes, where changes in interest rates can affect the value of underlying bonds and other fixed-income instruments.

Concentration Risk

Concentration risk arises when a scheme has significant exposure to a single sector, theme or issuer, which can increase volatility if that segment underperforms.

Where to Read More

Every scheme's Scheme Information Document (SID) and Key Information Memorandum (KIM) contain a detailed, scheme-specific description of applicable risks. Investors should read these documents carefully before investing.

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