Asset Management Risks: Due to the dynamic management, investment might have underperformed other funds with similar investment objectives.
Credit Risk: Credit risk is the risk that fixed income shares in a portfolio of funds lower your price or unable to pay interest or repay at maturity. This may be the result, that the issuer of the shares or its counterpart are defaulted payment or declare themselves unable to honor its financial obligations.
Derivatives Risk: The use of derivatives involves different risks possibly greater than the risks associated with investing directly in the underlying investments of derivatives. Derivatives can be volatile and involve significant risks, such as correlative risk, counterparty credit risk, hedging risk, leverage risks and liquidity risks, among others. Certain derivatives have the potential for unlimited loss regardless of the size of the initial investment.
Foreign Investment Risk: Investments in large multinational corporations, including US corporations, involve certain risks. The securities included in the portfolio are subject to risks associated with the business that large multinational place abroad, including political, regulatory, economic conditions and any other measures, such as currency fluctuations and risks associated with forms of custody and settlement.
Liquidity Risk This is the risk associated with the shortage of marketable securities, which can make it difficult or impossible to sell at an affordable price in order to minimize losses. The investment can lower your selling price, sell other investments or forego attractive investment opportunities.
Risks Interest Rate: This type of risk refers to the losses attributed to changes in the interest rate. When the interest rate increases, bond prices generally fall. In general, the longer the maturity or duration of a bond, the higher the sensitivity to changes in interest rates. Changes in interest rates may also increase the prepayments of debt obligations.
Market Risk: The market value of securities may fall, can not rise or fluctuate, sometimes rapidly and unpredictably. Market risk may affect a single issuer, sector of the economy, industry, or the market in general. These risks are generally higher for small and medium enterprises. Focus on a particular investment style, for example, growth investments or securities, you can generate funds underperforming in other mutual funds if this style fails in the market.
Sector Risk: A fund that focuses on a sector of the economy may be more susceptible to financial events, market or economic events affecting the sector, which funds are not concentrated in a particular sector. While a fund is more diversified in all sectors, it is shared more risk and potentially reducing volatility and risk of loss.
and excessive short-term trading: The market opportunity is the frequent and short-term trading by certain investors in a fund, trying to benefit from market volatility or speculation about an event. This activity could increase the risk of losses and increased intermediation costs that could prejudice the total return of the investor.
Distributions and Taxation
Rollovers: All the benefits received from investments; financed cash reserves for future rollovers or be devoted to fulfilling obligations under the goals and needs of customers.
Taxes: The intention is to finance the cash reserves through dividends and capital gains. Taxes depend on the time that has stayed the action and the type of distribution. Other tax differences are attributed to such accounts, accounts that do not qualify as tax accounts or accounts that qualify as IRA, Roth IRA, etc.