What determines a funds level of risk?
• The riskier the investments that the fund chooses, the riskier the fund will be. A higher risk means you may get a higher return, but there is also a greater chance of losing money. • Some types of mutual funds, such as equity funds, fall into the riskier category. Some equity mutual funds are more risky than others. Example: Some specialty mutual funds focus on certain kinds of investments, such as emerging markets, to try to earn a higher return. These kinds of funds also face the chance of a greater drop in value. Is my money safe if the mutual fund company goes out of business? Like any investment in the stock market, a mutual fund is not insured or guaranteed. This is true even if the mutual fund is sold by a bank. That’s because funds are securities, not deposits. Still, there are a number of safeguards that help protect investors. For example, by law: • A bank or trust company must hold the assets of a mutual fund. • The distributor for a mutual fund dealer must keep separate
