Emerging Market Risk Law and Legal Definition
Mutual funds that invest in emerging markets are affected by the following risks:
1.There is often less information available about foreign companies and governments because accounting, auditing and financial reporting standards vary from one country to another.
2. Securities of some companies traded only in foreign countries may be less liquid and more volatile than securities of comparable companies traded in Canada or the U.S.
3. Many of the securities markets of the countries in which a mutual fund invests may be subject to greater volatility, due to adverse events or large investors trading significant blocks of securities, than is usual in Canadian and U.S. markets.
4. Political or social instability could also affect the value of investments held by the mutual fund or result in the complete loss of such investments.