What is risk? Basically, it is the chance of events not turning out as expected. Risk is a part of investment. It is important to understand what the risks are. Like most people, you probably want to benefit the most from your investments without losing a good night's sleep worrying about your investments. Does this mean stocks are good for you? Or bonds are the way to go? The most important factor to remember is : regardless of where you invest, there's always some kinds of risk involved; hence, you need to be considerate with your investment decisions. Here are some main type of risk which investors should consider when investing in funds

Market risk

This type of risks occurs when the asset markets it invests decreases value in whole or in part within a period of time, and may cause the fall for the whole market due to domino effect; thus, it can go beyond the control of fund management company.

Interest risk
Fund's certificates are an investment instrument; therefore, they are easily impacted by interest rate factors which means that an increase in interest rate will cause the rise of input costs. The soar in expected interest rate would cause the fall in share and certificate in value, and vice versa.

Inflation risk
Inflation will contribute to the rise of input costs, and nominal interest rate; therefore, it effectively impacts share price and fund certificate values. Inflation risk directly influences business operations in which fund invests, as a result, influencing profit margin and its stock price.

Credit risk
Bond or other debt instrument-issuing organizations, in which the Fund invests, may be incurred with insolvency as such organizations are unable to cover interest or principal of the loans.

Liquidity risk in fund certificate
Fund's certificates are traded on the stock market, thus the liquidity of the funds depends on the demands of the markets. If you couldn't sell or redeem an investment quickly at a fair price to get the cash, it is an indication that your investment has low liquidity. A lack of liquidity can affect the price of the Fund's certificates.

Liquidity risk in asset allocation
One of major factors is that the Fund invests a significant portion of its assets in equitized companies, and such investments will only have high liquidity when shares can be traded on the securities market. Most of state enterprises will, subject to the state regulations, be listed after they have been equitized, but the interval between equitization and listing harbors factors are out of the control of fund management.

Legal risk
Since Vietnam followed market-oriented economy in the 1990s, the Government has gradually tried to perfect the legal framework for securities and securities market activities. In addition, these activities and securities investment funds operations, have been amended in legal documents issued in 1998. In 2006, at the pace of booming securities market and the entry to WTO, the government issued several related legal documents, including the Law on Securities, Decrees for providing guidelines, and rules for operations, etc. However, there still remains some certain risks resulting from legal factors such as: the compatibility with WTO's conditions, regulations on taxes applicable to investors in the fields of finance, securities, banking and accounting regime for fund management. Also, investment incentive policies in securities market and finance has not shown as strong to attract more idle public capital for the economy.

Conflict of interests
Fund management company may face certain conflict of interests in the investment funds against other financial products managed by the firm. However such conflict is unsystematic and manageable.

Risks from disbursement schedule
The distribution process of utilizing the Fund's assets to invest in companies, listed or unlisted, will largely depend on their equitization implementation timing and the approval for listing in accordance with the state policies. So, investors are advised to consider risks relating to the Fund's disbursement progress.

Possible fall of the Fund's NAV
This mainly results from the fall in value of shares on the over-the-counter market (OTC) and invested shares listed on the securities exchange. When it is a case, the NAV of the Fund may fall and directly affect its certificate value on the market.

Investors should carefully consider the investment objectives, risks tolerance rate, charges and expenses of the funds mentioned in the prospectus, fund charter before investing in funds managed by PHFM.

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