Mutual Fund investments are subject to market risks - We all know this universal disclaimer that follows each radio ad, newspaper ad and is mentioned in all policy documentation of mutual funds, right? We are so repetitively exposed to these words that we start taking them for granted every time we hear them. It sort of ends up beating the purpose.
The problem is, that the product distributors have to sound off their customers about risks involved in investments without scaring them away. And the customers are all too busy to read and understand the fine print when the main thing that matters is the expected returns from their investments. We've tried to summarize in brief what exactly are the risks involved in mutual funds and which ones you should care about in your portfolio.
There are broadly 5 risks that you need to know about with regards to your investments. We've explained them in their decreasing order of importance (in our opinion) -