Market Risk: It is the risk of loss arising due to changes in the market prices of stocks. This can even lead to the loss of capital if prices fall too much.
Credit Risk: The fund might invest in debt securities with a low credit rating, having higher chances of default. This can lead to loss of interest as well as principal.
Interest Rate Risk: It refers to the chance that investment in bonds will suffer due to unexpected changes in the interest rate. An increase in the interest rate leads to a fall in bond prices, translating into losses for investors.
Lack of expertise: The fund manager may not have enough expertise to handle both equity and debt components of the fund, leading to lower returns.
Lack of control: The funds are managed by fund managers. Hence, individual investors do not have any control over the securities or assets in which their money is being invested.
Expense Ratio: This is the cost that the investors need to pay to the mutual fund company for managing funds, reducing the return for investors.