Academy lesson

What is investment risk?

The chance of loss or volatility

Beginner·5 min read·Understanding Risk Foundation
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5 minute lesson

Risk is the possibility your returns differ from what you expect - including losing money. The main types:

  • Market risk - prices fall with the market (equity funds most exposed).
  • Credit risk - a bond issuer defaults (debt funds).
  • Liquidity risk - holdings are hard to sell (small-cap, low-rated debt).
  • Concentration risk - too much in a few stocks or one sector.

A long horizon and diversification are the simplest defences.

Connected intelligence

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Every recommendation is based on editor-approved Knowledge Graph relationships.

Learn the concept

related toWhat is a risk ratio?Sharpe, alpha, beta, standard deviation & moreWhy it is here: Connected through the Gajamudra Knowledge Graph.

See the research

researchesHow India's Small Cap Fund Managers Think | Gajamudra Research Series Episode 001We analysed the portfolios of 15 actively managed Small Cap mutual funds expecting to find 15 completely different investment strategies. Instead, we discovered surprising patterns of consensus, hidden conviction, and independent thinking that reveal how India's fund managers really build portfolios.Why it is here: Continue with evidence connected to this lesson.

Explore the data

applies withSector ExposureFull industry breakdown from holdings, top-sector weight and sector concentration (Gini of sector weights).Why it is here: Apply this concept to real disclosed portfolio data.

Understand the terms

explainsInvestment RiskThe possibility that an investment outcome differs from expectations, including loss, volatility or failure to meet a goal.Why it is here: Review a connected term in plain language.

Follow a Learning Route

part of routePortfolio BasicsRead holdings, allocation and concentration before comparing funds.Why it is here: Follow this topic through a guided Learning Route.

Related knowledge

referencesPharmaceuticalsA sector knowledge hub for portfolio exposure, related funds and research.Why it is here: Connected through the Gajamudra Knowledge Graph.

Check your understanding

RC2: What is investment risk? knowledge check

A short server-validated knowledge check.

Which is an investment risk?
Should risk be judged without the investor’s goal and horizon?

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