What are the risks involved in mutual funds? Let's understand how much risk any mutual fund scheme carries
1.MF riskometer is a graphical illustration of the risk any mutual fund scheme carries.2.Since each asset class has its own features and characteristics, each carries different risks.
3.In the case of debt funds, the risk value of holdings is calculated on the basis of three factors: credit risk, duration risk and liquidity risk.
4.In the case of equity funds, the risk value of each holding is calculated on the basis of three factors: market capitalisation, volatility and impact cost.
5.The six risk labels are: low, low to moderate, moderate, moderately high, high and very high.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
