Friday, April 19, 2013

Mutual Fund Currency Risk and Management Risk

Currency Risk also known as foreign exhange risk is the risk that fulctuations in the exchange rates may negatively effect the value of the funds investment. This applies to mutual funds that are denominated in one currency but invest in instruments denominated in another.

Management Risk is the type of risk associated with all actively managed forms of investments. Investment decisions are made by portfolio managers who can and do make mistakes from time to time by selecting wrong issues or misallocating the assets of the fund. These errors in judgement can result in a fund's underperformance, decline in value of even losses.

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