Risk Factors

Standard risk factors — mutual funds

• Mutual funds and securities investments are subject to market risks, and there is no assurance or guarantee that the objectives of any scheme will be achieved.
• The NAV of a scheme can go up or down depending on the factors and forces affecting the securities market, including fluctuations in interest rates.
• Past performance of the sponsor, the AMC or any scheme is not indicative of, and does not guarantee, the future performance of the scheme.
• The sponsor is not responsible or liable for any loss resulting from the operation of a scheme beyond the initial contribution made towards setting up the mutual fund.
• The name of a scheme does not in any manner indicate the quality of the scheme, its future prospects or its returns.

Equity schemes

• Market risk. Share prices fluctuate, sometimes sharply. Broad market falls of 30–50% have occurred historically and can occur again.
• Concentration risk. Sector, thematic and focused schemes hold fewer securities and can underperform the wider market for extended periods.
• Small and mid-cap risk. Smaller companies are more volatile and less liquid than large ones, and can fall further and recover more slowly.
• Liquidity risk. In stressed markets, securities may be difficult to sell at fair value.

Debt schemes

• Interest rate risk. Bond prices fall when interest rates rise. Longer-duration schemes are more sensitive.
• Credit risk. An issuer may default or be downgraded, reducing the value of the scheme's holdings.
• Liquidity risk. Some debt instruments trade thinly and may not be saleable at a fair price when needed.
• Reinvestment risk. Maturing holdings may have to be reinvested at lower rates.

Debt schemes are not equivalent to bank deposits and carry no capital protection.

Hybrid and index schemes

• Hybrid schemes carry the risks of both their equity and debt components, in the proportions held.
• Index funds and ETFs carry tracking error — their return may differ from that of the index they follow, because of costs and cash holdings.
• An index fund falls exactly as far as its index does. It removes fund-manager risk, not market risk.

Systematic plans

• An SIP averages the entry price but does not protect against loss, and does not guarantee a profit.
• An SWP drawing more than the portfolio earns will exhaust the corpus. The order in which returns arrive matters greatly during withdrawal.

Portfolio Management Services

• A PMS portfolio is concentrated, often fifteen to twenty-five securities. It can fall considerably harder than a diversified mutual fund scheme, and recover more slowly.
• There is no NAV-based daily liquidity. Exit terms, notice periods and exit loads are set by the Portfolio Manager in the agreement you sign.
• Fees may include a fixed management fee, a performance or profit-share fee, brokerage and custody charges. These reduce your net return and differ between Portfolio Managers.
• Taxation is at your own hands on each underlying transaction, not at the scheme level, so turnover in the strategy has a direct tax consequence for you.
• Performance depends substantially on the individual Portfolio Manager and the fund management team. Past or simulated performance is not indicative of future performance.
• PMS carries a SEBI-prescribed minimum investment. Below that threshold, mutual funds serve the same purpose at lower cost.
• We are an APMI registered distributor (APRN10515) only. We do not manage the portfolio and cannot influence what it holds.

Insurance

Insurance is the subject matter of solicitation.

• Non-disclosure of material facts — medical history, habits, occupation, existing policies — can result in a claim being rejected.
• Policies carry exclusions and waiting periods, including for pre-existing conditions.
• Room rent limits, sub-limits and co-payments can reduce the amount actually paid on a health claim.
• A lapsed policy provides no cover at all.
• Unit-linked policies carry investment risk in addition to insurance terms; the policyholder bears that risk entirely.

Loans against securities

• A fall in the value of pledged securities can trigger a margin call. If it is not met, the lender may sell the collateral, typically at the worst possible moment.
• Interest accrues regardless of how the underlying investment performs.
• Pledged units cannot be redeemed or switched until the lien is released.
• Borrowing to invest amplifies losses as well as gains.

Fixed deposits and bonds

• Corporate deposits carry credit risk. If the issuer defaults, interest and principal are at risk.
• Bank deposit insurance covers up to ₹5 lakh per depositor per bank, including principal and interest.
• Bond prices fall when interest rates rise, which matters if you need to sell before maturity.
• Interest is generally taxable at your slab rate, and TDS applies above threshold limits.

Risks common to everything

• Inflation risk. A return below inflation reduces purchasing power even when the nominal value rises.
• Tax risk. Tax rules change, and a change can alter the after-tax outcome of a long-held investment.
• Regulatory risk. Changes in regulation can affect product features and availability.
• Behavioural risk. Selling in a panic and buying in euphoria has cost Indian investors far more than any product feature.

Understand the riskometer

Every mutual fund scheme carries a riskometer with six levels — Low, Low to Moderate, Moderate, Moderately High, High and Very High. It is disclosed on the front page of the scheme document and updated monthly. Check it before you invest, and check it again if you have held a scheme for several years; a scheme's risk level can be revised.

Last updated: · Jana Finserv · ARN-49170 · APRN10515 · Holder: Prabir Kumar Jana · pkjanaonline@gmail.com · +91 93399 04841
B-10 Nayabad Avenue, New Garia, Kolkata, West Bengal 700094