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Funds Run A Risk

The degree of risk in mutual funds can vary from low to high, but they are never risk-free…

I want to invest Rs 4 lakh in a mutual fund for the next one year and looking at gaining 15 per cent or more. I don’t want to invest in an aggressive fund because I don’t want to lose on the capital.
- Bhavesh Sharma

The fine print of every mutual fund document runs the caveat that mutual funds are subject to market risks. Considering mutual funds have investments in stocks and bonds, which are not risk free, investing in mutual funds is not risk free. The degree of risk can vary from being low to high, but there is no such thing as risk free mutual funds.

If you are looking for risk free 15 per cent returns, mutual funds are not for you. Moreover, a time frame of a year is too short to consider investing in equity mutual funds. If assured returns with capital protection is what you are looking for; bank deposits are a better bet, especially with rise in interest rates; you can hope to get guaranteed double digit returns on a one year deposit.

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