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Understanding margin call risks in LAMF
Margin calls in LAMF can occur during market declines, making active portfolio monitoring, prudent borrowing, and adequate buffers essential for effective risk management.
Market volatility can reduce the value of pledged mutual fund units, affecting loan to value ratios. When thresholds are breached, lenders may issue margin calls seeking partial repayment or extra collateral. Investors using Loan Against Mutual Funds should monitor portfolios regularly. Maintaining buffers, diversifying holdings, and conservative borrowing levels helps reduce forced liquidation risk during sharp market corrections and sudden drawdowns in volatile periods overall. Apply Now