Home     About Us    Contact Us     Contribute     Privacy
Investing
Stocks
Bonds
Mutual Funds
Biz
Credit
Career
College
Economics
Tax
More
 
 
Marketplace
Related Articles
More
Related Definitions
Related Categories
Tip of the Day

Tip of the Day Index Funds are Your Friend

Index Funds are Your Friend - Every stock market or stock exchange offers indexed funds and these index funds are more beneficial to you as a new investor as they...

read entire tip

Related Podcasts
Recently Added
Other Great Sites
 

Mutual Fund Risks

As different mutual fund categories have different risk categories it is hard to compare them on the same playing field. A low or below average risk bond fund, as an example, cannot be assessed the same as below average stock fund. This is because although they are both low risk in their categories stock funds have a higher risk/return potential than bond funds. Cash investments or money markets are usually the most stable but also yield the lowest long-term results. Bonds often experience short term fluctuations but usually generate higher long term returns. Stocks though have usually been subject to short-term price swings but provide the highest long-term returns overall. Often financial managers will recommend funds which incorporate different asset classes and create a balanced or hybrid mutual fund tailored to the customer's wishes. Asset allocation portfolios are special mutual funds that actually invest in other mutual fund classes. The manager can buy sell and shift securities at his discretion between funds according to the changing market conditions.

Risks to mutual funds often reflect the investments that are held in the funds. Bond funds are affected by both interest rate risk and income risk, which also makes their value dependent on the interest rates. Rising interest rates bond values drop and if they drop bond values increase. Short term bond funds are a greater income risk than long-term bond funds. Stock funds however invest in only one single industry and the risks that affect their prices is dependent mainly on industry developments.

Some of the terms for things you should know when looking at risk factors when investing will include: call risk which is the possibility of a falling interest rate causing a bond issuer to redeem prior to maturity date, country risks such as wars, elections disasters etc., credit risk that a bond issuer will fail to repay interest and principal in timely fashion (default risk), currency risk such as returns being reduced due to rise in value of U.S. dollar, income risk-fixed income funds dividends decline because of low interest rates, industry risk- prices may fall due to unexpected development in one or more industries invested in, Inflation or interest rate risks, manager risks where fund manager proves to be incompetent, market risk where overall most bond fund prices will drop and principal risk where an investment will just lose money from the original or invested amount.

Discuss It!

discount codes said:

Itâs a tremendous post. I am truly grateful for this blog and I was in fact looking for something impressive like this should stay longer here, read all the post very nice posting you have

Human Resources Assignment Help said:

Our website is number in HR Assignment Help & homework help. This is preferred destination for various students to get their HRM assignment done.

Net Operating Income Approach Assignment Help said:

Net Operating Income Approach Assignment Help Introduction This approach recommends that the capital structure choice of a company is unimportant

msqrd for windows said:

nice app for photo edit..

http://pixwords-help.org/en/10-symbols said:

I'm awed, I should state. Every once in a while do I go over a web journal that is both useful and charming, and shocking, you've nailed it.

best essay writing service reviews said:

I have find best topics on mutual fund risks in the public. The details are getting to update best stories and reviews. Then every user happy to chose your blog shared instructions.

spotify premium apk download said:

great one mate

titanium back up pro apk said:

is helpful in backing up all your data. Titanium Backup Pro Apk is the best app for backing up your devices

mysmartstuffs said:

greatest website for business people.

Pokemon magikarp jump Hack said:

'm awed, I should state. Every once in a while do I go over a web journal that is both useful and charming, and shocking, you've nailed it.

here said:

I have been looking for quite a long time and fortunately I read this article!

www.routerlogins.co/ said:

www.routerlogins.co/ Using a router is common now days and a routerlogin is even a must in every household

Most Popular Articles
Most Popular Definitions
 
Daily Definition

Definition of the Day Proof Of Concept

Proof Of Concept – (Proof-of-concept) Referring to the types and applicability, reliability or evidence, verification, confirmation and corroboration, even substantiation, or resilience of data, fact etc. Also called POC, showing its usefulness and applications, features and possibilities, allowing to an extent no to low risk exposure and exploration, prospecting if...

read entire definition

 
 

 

 

Home     About Us    Contact Us     Contribute     Sitemap

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Copyright © 2009 TeenAnalyst.com