Due to the fluctuation of the price / value / interest rates of the securities in which Scheme invests, the value of investment in the Scheme may go up or down depending on the various factors and forces affecting the capital markets and money markets. There is no guarantee that the Fund will be able to meet its investment objective. Unitholders may incur absolute and relative losses, including loss of principal, when investing in the Fund. Investors should study this Offer Document carefully before investing. Government policy and tax laws may change, affecting the return on investments of the fund, which may eventually affect the NAV and return of the Units.

The investments made are subject to external risks such as war, natural calamities, and policy changes of local / international markets which affect macro-economic situation and capital market as well as money market of the country.

Market risk is basically a risk which may result in losses for any investor due to a poor performance of the market. Bangladesh capital market, being a frontier market, is characterized by high returns and high volatility, and mutual fund prices and prices of securities can fluctuate significantly from their respective fundamental value estimates, at times for prolonged period. The Fund may lose its value or incur a sizable loss on its investments due to such market volatility. Stock market trends indicate that prices of majority of all the listed securities move in unpredictable direction which may affect the value of the Fund.

The risk arises from the observation that more concentrated portfolios are less diverse and therefore the returns on the underlying assets are more correlated. Due to a limited number of high-quality listed stocks in both the DSE and CSE, it may be difficult to invest the Fund’s assets in a widely diversified equity portfolio as and when required to do so. Very narrow and highly thinly traded bond market of the country has not been supporting the Asset Manager to design and implement optimum asset allocation decisions from time to time.

A mutual fund is at its core a managed portfolio of stocks and/or bonds. Hence, the income of a mutual fund is largely dependent on the dividends on stocks and held in the fund’s portfolio. Despite careful investment selection of companies in the Fund, if the companies fail to provide the expected dividend or fail to disburse dividends declared in a timely manner that will impact the income and the overall return of the Fund.

Liquidity risk refers to the difficulty to redeem an investment without incurring a loss in the value of the instrument. It can also occur when a seller is unable to find a buyer for the security. Liquidity risk arises for investing in Pre-Public Offer Placement securities i.e. in the unlisted equity securities by the Fund, market conditions and investment allocation. Debt securities, while somewhat less liquid, lack a well-developed secondary market, which may restrict the selling ability of the Fund, and may lead to the Fund incurring losses till the security is finally sold. While securities listed on the stock exchange carry lower liquidity risk, the ability to sell these investments is limited by the overall trading volume on the stock exchanges and may lead to the Fund incurring losses till the security is finally sold.

Risks and potential returns vary greatly from investment to investment. Since the Fund will be an actively managed investment portfolio; the Fund performance will remain subject to the investment management strategy risk. The fund manager will undertake rigorous investment research and risk management exercise at all the time; however, there can be no guarantee that such process and techniques will produce the desired outcome. Due to the long-term fundamental analysis driven management style of the fund manager, the Fund may drag performance relative to the market index/ benchmark in too weak or strong market conditions when market volatility is high.

Credit risk basically means that the issuer of the scheme is unable to pay what was promised as interest. Since the Fund will seek to also invest as per the সিকিউরিটিজ ও এক্সচেঞ্জকমিশন (মিউচুয়ালফান্ড) বিধিমালা, ২০০১, in both equity and fixed income securities; the credit risk of the fixed income issuers is also associated with the Fund. Investment in fixed income securities are subject to the risk of an issuer’s inability to meet interest and principal payments on its obligations and market perception of the creditworthiness of the issuer.

Interest rate risk is the risk that an investment’s value will change due to a change in the absolute level of interest rates. A portion of the fund will be invested in the money market and fixed income instruments. These instruments will be directly affected by interest rate fluctuation.  However, value of equity securities is inversely and non-linearly related to general level of interest rates. As allocation for equity securities will generally be higher than that for fixed income securities, NAV of the Fund is expected to increase from a fall in interest rates and vice versa. Additionally, zero coupon securities do not provide periodic interest payments to their investors making them riskier from interest rate risk perspective. However, the AMC may choose to invest in zero coupon securities that offer attractive yields commensurable for inherent higher level of interest rate risk. 

Issuer risk arises from corporate governance risk, management malfeasance, accounting irregularities, unfavorable changes in management team or management strategy leading to corporate under-performance. Such risks can develop in an unpredictable way where corporate insiders have way more information in their custody than the public investors including the fund manager. Hence such risks can only be partially mitigated by thorough research or due diligence. To the degree that the Fund is exposed to a security whose value declines due to issuer risk, the Fund’s value may be impaired.