Risk Factors in Mutual Fund Investing
⚠️ Mutual Fund investments are subject to market risks.
Types of Risk
Market Risk
Unit values fluctuate with market conditions. Equity funds carry higher market risk.
Credit Risk
Debt funds may suffer if bond issuers default on payments.
Interest Rate Risk
Rising interest rates reduce bond prices, affecting debt fund NAVs.
Liquidity Risk
Some funds may face difficulty liquidating positions quickly.
Concentration Risk
Sector-focused funds carry higher risk if that sector underperforms.
Currency Risk
International and FOF schemes face foreign exchange rate risk.
Risk vs Return (Indicative)
| Fund Type | Risk | Returns* | Horizon |
|---|---|---|---|
| Liquid/Overnight | Low | 5–6% | <3 months |
| Short Debt | Low-Moderate | 6–7% | 1–3 years |
| Hybrid | Moderate | 8–10% | 3–5 years |
| Large Cap | High | 10–12% | 5+ years |
| Mid/Small Cap | Very High | 12–18% | 7+ years |
*Historical indicative averages. Not guaranteed.