We generally sell mutual funds as an investment product , and like all other products , it also has some risk . The level of risk in a mutual funddepends on what it invests in.The value of most mutual funds will change as the value of their investments goes up and down.
Usually, the higher the potential returns, the higher the risk will be. For example, stocks are generally riskier than bonds, so an equityfund tends to be riskier than a fixed income
Your Risk is minimised in MF :
Because mutual funds are securities — and not deposits — they’re not guaranteed by Government or other deposit insurance. But other safeguards are in place to protect investors:
- Third-party custodian – holds the assets of a mutual fund. This is usually a trust
- Independent auditor – reviews and reports on the fund’s financial statements each year
- Strong regulator – SEBI is the regulator for all Mutual Funds in India , which ensures that nothing goes wrong at the management front.