Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
Key Risks Associated with Mutual Funds:
Market Risk: Often referred to as systematic risk, it can cause losses for any investor as a result of the market’s underperformance. Numerous things influence the market, like natural disasters, inflation, recessions, political upheaval and others. During these scenarios, the only thing an investor can do is wait for everything to fall into place.
Liquidity Risk: This risk refers to the difficulty of redeeming an investment without losing the instrument’s value. It may also happen when an investor is unable to locate a buyer for the security. The lock-in period of mutual funds, such as ELSS, may result in liquidity risk while nothing can be done during the lock-in period. In another scenario, exchange-traded funds (ETFs) may face liquidity risk. The easiest approach to avoid this is to maintain a varied portfolio and choose the fund carefully.
Credit Risk: It occurs when the scheme’s issuer is unable to pay the agreed-upon interest rate. On these criteria, agencies that handle investments are typically rated by rating agencies. So, an individual can notice that a company with a good rating will pay less, and vice versa.
Concentration Risk: It often focuses on only one thing. Concentrating a large portion of one’s investment in a single scheme is never a wise idea. If you’re lucky, you’ll make a lot of money, but the losses will be as pronounced at times. The best approach to mitigate this risk is to diversify your investments.
Interest Rate Risk: This risk is typically faced by debt mutual funds. The interest rates fluctuate based on the credit available to lenders and the demand from borrowers, which are inversely related to one another. This means that an increase in interest rates throughout the investment period may cause a decrease in the price of securities.
(Edited by : Sudarsanan Mani)
