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14h ago3 Major Risks of Loan Against Mutual Funds
Loans Against Mutual Funds (LAMF) offer liquidity but come with notable risks. First, market volatility can erode NAVs by 20–30%, triggering margin calls. If borrowers can’t add collateral or repay, lenders may forcibly liquidate holdings at depressed prices. Second, interest costs can outweigh fund returns—borrowing at 11% while earning 8% results in net loss. Third, easy credit access can lead to overleveraging. Experts advise maintaining a 10–15% safety buffer above LTV and borrowing conservatively to avoid repayment stress.
neutral
14h ago3 Major Risks of Loan Against Mutual Funds
Loans Against Mutual Funds (LAMF) offer liquidity but come with notable risks. First, market volatility can erode NAVs by 20–30%, triggering margin calls. If borrowers can’t add collateral or repay, lenders may forcibly liquidate holdings at depressed prices. Second, interest costs can outweigh fund returns—borrowing at 11% while earning 8% results in net loss. Third, easy credit access can lead to overleveraging. Experts advise maintaining a 10–15% safety buffer above LTV and borrowing conservatively to avoid repayment stress.
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3 Major Risks of Loan Against Mutual Funds
about 15 hours ago
1 min read
78 words
LAMF poses market, interest, and leverage risks; NAV declines can trigger liquidation. Maintain a 10–15% buffer and avoid excessive borrowing to stay protected.
Loans Against Mutual Funds (LAMF) offer liquidity but come with notable risks. First, market volatility can erode NAVs by 20–30%, triggering margin calls. If borrowers can’t add collateral or repay, lenders may forcibly liquidate holdings at depressed prices. Second, interest costs can outweigh fund returns—borrowing at 11% while earning 8% results in net loss. Third, easy credit access can lead to overleveraging. Experts advise maintaining a 10–15% safety buffer above LTV and borrowing conservatively to avoid repayment stress.
Loans Against Mutual Funds (LAMF) offer liquidity but come with notable risks. First, market volatility can erode NAVs by 20–30%, triggering margin calls. If borrowers can’t add collateral or repay, lenders may forcibly liquidate holdings at depressed prices. Second, interest costs can outweigh fund returns—borrowing at 11% while earning 8% results in net loss. Third, easy credit access can lead to overleveraging. Experts advise maintaining a 10–15% safety buffer above LTV and borrowing conservatively to avoid repayment stress.
Tags:
mutual_funds
LAMF
mutual_funds
LAMF
risk management
leverage
margin call
Source:
Oct 23, 2025 • 13:57 IST