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The Biggest Risks in Loan Against Mutual Funds Most Investors Overlook
Shift from high credit card interest to lower-cost LAMF borrowing to reduce debt burden.
The hidden killer in LAMF is interest rate volatility. Rates are typically floating, and a 2% central bank hike can raise your interest burden by nearly 20%. Another major risk is concentration risk. If you pledge a single sector fund, like technology, and it falls 30%, lenders may liquidate units. Diversifying across 3–4 categories helps reduce exposure.