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Target Risk Fund

What is 'Target Risk Fund'

A fund that attempts to expose its investors to a specified amount of risk. The fund manager of a target risk fund is responsible for overseeing all the securities owned within the fund, to ensure that the level of risk isn't greater or less than the fund's target amount of risk exposure.

Explaining 'Target Risk Fund'

Target risk funds typically label themselves as "conservative", "moderate risk" or "aggressive" in terms of their risk exposure. Regardless of the label applied, the intent is to offer a relatively constant level of risk exposure to investors.

This allows investors who are considered highly risk averse to identify and select a fund of funds that has a conservative risk exposure target, and once invested in the fund, remain confident that their level of risk exposure will not change substantially.

The manager of a target risk fund is responsible for ensuring that the fund's level of risk exposure is on target, and the fee's charged for operating the fund (on top of the fees charged by mutual funds owned within the target risk fund) is compensation for the value-added service.


Further Reading


Bank characteristics and stock reactions to federal funds rate target changes
www.tandfonline.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

Averting crisis? Assessing measures to manage financial integration in emerging economiesAverting crisis? Assessing measures to manage financial integration in emerging economies
academic.oup.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

… movements, risk perceptions, and economic outcomes: The effect of primary and secondary stakeholder activism on firms' perceived environmental risk and financial …… movements, risk perceptions, and economic outcomes: The effect of primary and secondary stakeholder activism on firms' perceived environmental risk and financial …
journals.sagepub.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

Friends or foes? Target selection decisions of sovereign wealth funds and their consequencesFriends or foes? Target selection decisions of sovereign wealth funds and their consequences
www.sciencedirect.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

Risk management failures: What are they and when do they happen?Risk management failures: What are they and when do they happen?
onlinelibrary.wiley.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

Interest rate pass through and asymmetric adjustment: evidence from the federal funds rate operating target periodInterest rate pass through and asymmetric adjustment: evidence from the federal funds rate operating target period
www.tandfonline.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …

Sovereign Wealth Funds: a literature reviewSovereign Wealth Funds: a literature review
www.sciencedirect.com [PDF]
… to maintain a certain level of capital to absorb monetary shocks and other risks, but too … Cook, T. and Hahn, T. (1989) The effect of changes in the federal funds rate target on market … Fraser, DR, Madura, J. and Weigand, RA (2002) Sources of bank interest rate risk, The Financial …


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