Risky business

Q

How can one learn about what risks a company faces?

— H.C., Columbus, Mississippi

A

Companies don’t like to broadcast their risks and challenges, but publicly traded American companies are required by the Securities and Exchange Commission to list them. Look up a company’s annual “10-K” report at websites such as SEC. gov/edgar.shtml or the company’s own website, and you’ll find a detailed review of its financial and operational health and progress and a thorough overview of the risks it faces.

For example, here are some (of many) risk factors cited in Apple’s 10-K for 2018 (and discussed in more depth there): dependence on “component and product manufacturing and logistical services provided by outsourcing partners, many ... outside of the U.S.”; effects of “Global and regional economic conditions” on Apple’s “business, results of operations, financial condition and growth”; and reliance “on access to third-party digital content, which may not be available ... on commercially reasonable terms or at all.”

Every company faces risks. They shouldn’t scare you away, but do consider them. Know, too, that companies can manage many of their risks. Ways to do this include insurance and locking in currency rates or commodity prices via futures contracts.

Q

What’s a mutual fund’s “load”?

— P.D., online

A

It’s essentially a sales fee, typically charged when you buy into the fund. (Sometimes it’s charged when you sell out of the fund, and sometimes on an ongoing basis.)

Loads can be as high as 8.5 percent, but 5.75 percent or lower is more common. Fortunately, there are plenty of noload funds; the vast majority of assets in mutual funds are in those with no loads.