Is it risky to buy a money fund?
Monetary fund has the characteristics of high security, strong liquidity, stable income and low investment threshold, which is more suitable for conservative investors with weak risk tolerance. But no matter what kind of wealth management products, there will be certain risks. The following are the possible risks of the money fund:
1, market fluctuation risk
The income of the money fund mainly comes from the interest income of fixed-income products and the change of securities prices. With the change of the market, the net value of the money fund will fluctuate to some extent, and the income of the money fund is relatively low, far lower than that of stocks and other products.
2. Credit risk
For example, the issuer defaults and cannot issue on time. If the above situation occurs, investors may face losses. In order to pursue high returns, some types of money funds may choose bonds with lower credit ratings, further increasing credit issuance.
3. Interest rate risk
For example, when the central bank adjusts the interest rate, the dividend income and net asset value of the money fund may also change or even decrease, especially when the interest rate is raised, the income of the money fund will be greatly affected.
4. Liquidity risk
If a large number of investors redeem the money fund at the same time, the fund may be unable to meet the redemption needs of investors because of insufficient cash, thus causing investors to suffer losses. There is another problem. If there is an emergency or market change in the fund company, it will also affect the redemption operation of investors.
5. Exchange rate risk
If the money fund holds foreign bonds or money market instruments, the fluctuation of currency value may affect the net value of the fund to some extent.