To help investors better understand risks involved in mutual fund investments, regulator SEBI had replaced the mandatory colour codes with a ‘riskometer’ containing five levels of risks from low to high. Similar to a speedometer that tells you how much you are speeding, Riskometer helps you to understand the risk profile and level of the MF scheme.
Earlier, the practice of representing the level of risk that a mutual fund scheme carries was denoted in terms of blue, yellow and brown colour.
Every MF scheme will carry this representation indicating the level of risk it carries. Riskometer, as it has been labelled, is a pictorial representation of the risk carried by a fund.
x. LOW - Principal at low risk
xi. MODERATELY LOW principal at moderately low risk
xii. MODERATE - Principal at moderate risk
xiii. MODERATELY HIGH Principal at moderately high risk
xiv. HIGH - Principal at high risk
To help investors, take an informed decision, such product labelling is available in the following documents:
1. Front page of initial offering application forms, Key Information Memorandum (KIM) and Scheme Information Documents (SIDs).
2. Common application form – along with the information about the scheme.
3. Scheme advertisements
In addition, investors should also refer to the product labeling of the scheme. All the mutual funds are required to label their schemes on the following parameters:
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