Anish Writes: The Middle Bucket of Investment Allocation

Market risk:?Will include assets that provide market returns along with market risks. All conventional equity investments will fall under this category. Fixed-income investments that carry interest rates and credit risk also belong here such as medium and long duration debt fund and credit risk funds.

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Most of us will have our investments in this bucket. And this doesn’t just include broad based equity investments like Index Funds, Active Mutual Funds and other investments with equity. These can also include fixed income or bond funds which have credit risk as well interest rate risk. For eg, the last one year equity markets have gone down or are flat. However with rise in interest rates over the last year,?so did bond funds which are exposed to interest rate risk. This risk is something one has to take in order to earn equity returns. There is no escaping it. Only managing it.

Regards,

Anish