All mutual funds come with varying degrees of risks, but that doesn’t mean you should not invest in them. The thumb rule of building wealth is: if you want returns, you have to take a bit of risk. The trick is to know the tricks to beat the risks.
Volatility
Equity mutual funds, or for that matter all equity investments, are prone to volatility. In 2016, the S&P BSE Sensex returned 1.95%. In 2017, it gave 28% returns. So far in 2018, Sensex is down 3%. Mid-cap and small-cap indices—and by extension, the funds that invest in such companies—swing more wildly.