Types and Risks of Mutual Funds

25 Jan 2021 Written by: Redaksi OCBC NISP

High risk High Return, a term often heard in investing. Everyone also has a different investment risk profile.

So, how much risk we can bear will determine what type of Mutual Fund is right for us. Based on the level of risk, types of mutual funds are divided into four:

Furthermore, are there any risks when investing in Mutual Funds? There are several risks we need to be aware of:

  1. The risk of reduced NAV, which occurs due to economic or political conditions that affect the decline in asset prices in the mutual fund portfolio
  2. Liquidity risk, which is the difficulty for an Investment Manager if most of the unit holders make redemptions on the units they hold
  3. Default risk, where the risk can occur if the insurance company that insures the Mutual Fund's assets does not immediately pay compensation.

In essence, all risks that could potentially occur in Mutual Funds can be mitigated if we carry out good investment planning and management.

In addition, the right diversification principle is also needed to minimize risk. If one company experiences a loss, but you still have allocations to other companies that are profitable, of course it will not reduce your portfolio.

Immediately access ONe Mobile Mutual Fund feature, or contact the nearest OCBC NISP customer service!

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