PersonalFN Direct has listed down few important disclosures for the investors/readers to understand about the type of mutual funds recommended and the terms used while providing the recommendations :

  1. Key Asset Classes
    1. Equity

      Risk Involved in Key Asset Classes

      Investing in Equities involves Market risk, Volatility risk, industry risk and business risk.

      Market risk is the chance that the prices of the stocks of the companies will fall due to various economic conditions.

      Equity markets are volatile and the value of securities may fluctuate dramatically from day to day.

      Industry risk is the chance that the prices of the stocks of a particular industry will fall due to the factors affecting a particular industry.

      Business risk is the chance that the prices of the stocks of a particular company will fall due to the decisions of the management of the company and other economy related and industry related risk.

    2. Debt

      Investing in Debt involves Market interest rate risk, inflation risk and credit rating risk.

      Market interest rate risk is the risk which depends upon the interest rate declared by the RBI. Interest rate on debt instruments may go up or down depending upon prevailing interest rates in the market.

      High inflation may result in lower interest rate on debt than inflation, which results in decreasing the purchasing power.

      Credit rating risk is the risk which depends on the credit worthiness of the debt issuer, generally high rated funds have low yields while low rate funds have higher yields.

  2. Terms
    1. Risk

      Risk is the chance of incurring loss i.e. the actual return on an investment might be less than the expected return.

    2. Return

      The yield on different asset classes is the return of the portfolio. Return is based on the risk apetite of an individual.

    3. Time Horizon

      Time horizon is the number of years left for the goal or accumulation period in which funds has to be gathered.