Why this matters
Investing in mutual funds and securities involves a range of risks. Reading this section is not optional — it is part of being an informed investor. If anything below is unclear, please ask your FinSec advisor before investing.
Market risk
The value of investments may decline due to factors affecting the broader market — economic cycles, interest rates, currency moves, geopolitical events. Equity funds can experience drawdowns of 30% or more in stressed markets.
Credit risk
Debt fund holdings include bonds. The issuer of a bond may default on interest or principal, causing the bond price to fall sharply. This risk is higher in lower-rated paper.
Interest rate risk
When interest rates rise, bond prices fall — and the longer the bond duration, the larger the drop. Debt funds with longer-dated holdings can show notable NAV volatility during rate cycles.
Liquidity risk
Some securities are harder to sell quickly at fair value, particularly in stressed markets. This can affect a fund's ability to honour redemptions at NAV.
Concentration risk
Sectoral or thematic funds (e.g. banking, pharma, tech) concentrate exposure to specific industries and tend to be more volatile than diversified funds.
Currency risk
International funds and gold funds have exposure to foreign exchange movements. An adverse INR move can reduce returns even when the underlying asset performs well.
Behavioural risk
The biggest, least-discussed risk is your own behaviour. Selling at the bottom, chasing last year's winners, abandoning a SIP after one bad year — these have destroyed more wealth than any market crash. Our role is to coach you through these moments.
Investor caution
Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not indicative of future performance.
Questions about this policy? Email hello@finsecvision.in or contact us.