RISKS INVOLVED IN MUTUAL FUNDS :

Mutual funds may face the following risks, leading to non-satisfactory performance:

1. Excessive diversification of portfolio, losing focus on the securities of the key segments.

2. Too much concentration on blue-chip securities which are high priced and which do not offer more than average return.

3. Necessity to effect high turnover through liquidation of portfolio resulting in large payments of brokerage and commission.

4. Poor planning of investment with minimum returns.

5. Unresearched forecast on income, profits and Government policies.

6. Fund managers being unaccountable for poor results.

7. Failure to identify clearly the risk of the scheme as distinct from risk of the market.