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Diversification and hidden overlap
Owning several mutual funds does not automatically create several independent sources of risk. Diversification depends on what the funds hold and how those investments respond to...
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Mutual Funds Investment Guide
Understand how mutual funds work, compare their costs and risks, and build a disciplined investment process. Follow eight stages from pooled ownership to portfolio construction and ongoing research.
Start with What you own when you buy a mutual fund, then follow the next lesson links. Explore 32 lessons with worked examples, exercises and further reading.
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Understanding Fund Risks · All lessons
Understanding Fund Risks
Investigate concentration, credit, currencies, liquidity and complex strategies.
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Duration and credit risk inside bond funds
Bond funds combine interest rate sensitivity, credit exposure and trading conditions. A higher yield can compensate for additional risk rather than signal a better bargain.
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Global funds and currency hedging
A global mutual fund can expose investors to both asset returns and exchange rate movements. The currency used to quote a share class does not, by...
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Liquidity, derivatives and alternative mutual funds
Some mutual funds use derivatives, less liquid assets or alternative strategies. These techniques can change the sources of return and introduce risks that are not obvious...
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