Systematic risk is the risk that impacts the whole market or a big part of it. It's also known as market risk,. It is known as market risk. It is the risk inherent to the entire market, attributable to a mix of factors including economic, socio-political, and market-related events.
While the chance of such an event is low, you must consider it while investing as it highlights the uncertainty associated with factors that could have a cascading effect.
Types of Systematic Risk
1) Market Risk
Market risk refers to the potential impact of general market conditions on investment performance, including market volatility, investor sentiment and supply/demand trends. These general market factors may influence the performance of different types of investments.
2) Interest Rate Risk
Interest rate risk refers to the likelihood that interest rate changes will affect the investment's performance. For instance, fixed-income products like bonds often lose value when interest rates rise and vice versa.
3) Inflation Risk
A sharp inflation rise could trigger higher interest rates and a selloff in equity and bond markets.
4) Political Risk
Political risk is the possibility of sudden changes in governmental policy or even political unrest. It will affect the performance of investments.
5) Currency Risk
Cross-border investing comes with currency risk. The value of your investment could fluctuate with the volatility in the foreign exchange markets.
Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
