Risk Factors

Last updated: 1 August 2026 · RG Wealth Creation · ARN 308075

Standard risk factors

• Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk and default risk, including the possible loss of the principal amount invested.
• As the price and value of the securities in which a scheme invests fluctuate, the value of your investment may go up or down.
• Past performance of the sponsor, the AMC, the mutual fund or any of its schemes is not indicative of the future performance of any scheme.
• The sponsor is not responsible or liable for any loss beyond the initial contribution made by it 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 the returns it may generate.
• There is no assurance or guarantee that the objective of any scheme will be achieved.
• Neither the mutual fund nor the AMC guarantees or assures any dividend, distribution or return of capital, except where a product is expressly structured with such a feature and stated in its offer document.

Risks that apply to particular categories

Equity and equity-related schemes

• Prices of listed shares fluctuate daily and can fall substantially over extended periods.
• Concentration in a sector, a theme or a market capitalisation segment increases the range of possible outcomes.
• Small and mid capitalisation securities can be materially less liquid than large capitalisation securities, particularly in falling markets.

Debt and money-market schemes

• Interest rate risk: the value of debt securities moves inversely to interest rates, and longer-maturity instruments move more.
• Credit risk: the issuer may delay or default on payment of interest or principal. A credit rating is an opinion, not a guarantee.
• Liquidity risk: instruments may be difficult to sell at a fair price in stressed markets, which is often when redemption pressure is highest.
• Reinvestment risk: cash flows may have to be reinvested at rates lower than those originally available.

Hybrid schemes

• Carry the risks of both the equity and debt portions, in the proportion held at any time.

Index funds and exchange traded funds

• Track the index and therefore fall fully when the index falls; there is no discretion to reduce exposure.
• Tracking error: returns may differ from the index owing to expenses, cash holdings and rebalancing.
• ETF units traded on an exchange may quote at a premium or discount to their underlying value, and trading volumes may be thin.

Gold funds and ETFs

• Exposed to movements in gold prices and, where relevant, to currency movements. Gold generates no income.

Schemes with a lock-in, such as ELSS

• Units cannot be redeemed during the lock-in period even if their value falls or your circumstances change.

Other risks worth understanding

• Inflation risk: a return that looks positive may still reduce purchasing power over time.
• Sequence risk: for someone withdrawing regularly, poor returns in the early years do disproportionate damage.
• Regulatory and tax risk: changes in law, including with retrospective effect, can alter outcomes.
• Behavioural risk: stopping in a falling market or entering after a strong rise changes your result far more than scheme selection does.

What this means in practice

Risk is not eliminated by choosing a well-known AMC, by investing through a distributor, or by holding for a long period. It is managed by matching the category to your time horizon, understanding what you hold, and not committing money you may need at short notice. If any risk described here is not clear, ask us before you invest — not after.