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Risks of portfolio investment:
1. Credit risk
The investor suffered a loss because the issuer was unable to repay interest due to maturity. This risk is mainly influenced by the ability of issuers to operate, capital size, career prospects and business stability. General government securities have low credit risk and are investment-grade securities, while those with poor creditworthiness and high risk are speculative securities。
2. Interest rate risk
Changes in the level of interest rates in financial markets may result in losses for investors。
3. Inflation risk
As a result of currency devaluations and price increases, the remuneration received for investing in securities has depreciated relative to price increases and real purchasing power has decreased, thus causing losses to investors。
Market risk
Losses to investors due to changes in equity markets or economic volatility。
5. Duration risk
This refers to losses due to higher uncertainties caused by longer maturity periods of bonds. In order to compensate for such losses, the return on investment of bonds of the same kind should be higher if they are of longer duration. In addition, there are political risks, foreign exchange risks, etc. Portfolio risk is generally positively related to investment returns, high-yield securities, high investment risk and, conversely, low-yield bonds and low investment risk。
Characteristics of portfolio investment funds
The portfolio investment fund is the portfolio approach used, which effectively reduces risk in portfolio investment. (b) the combination of a variety of equity securities in portfolio funds reduces risk;
The portfolio investment fund is invested by specialized investment experts in the fund management firm, who have a wealth of knowledge and experience;
3. The volume of investments is flexible, and the funds available for investment can be substantial and small。
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