Market Risk

Market risk relates to potential  losses from movements in the market price of assets in which a position is held . Market risk will always exist to some degree as a result of the complexity of the global financial and economic systems. As it is impossible to determine with certainty whether a market or asset will rise or fall in value by some future date, there is always market risk associated with any investment.  Historical values of a market should not be taken as an indication of the future performance of that market and neither can fundamental valuations be used as a reliable guide to future values. Both of these facets contribute to market risk.

Factors that may affect a market and its value are (but not limited too):

  • movements in related and unrelated markets
  • changes in interest rates
  • changes in currency rates
  • changes in monetary or fiscal policy
  • movement of funds by institutions or fund managers
  • politics and political uncertainty