Risk-O-Meter : Product labelling of Mutual Funds

As per SEBI guidelines, mutual fund schemes are to be labelled according to the level of risk involved and the same is to be depicted on the risk-o-meter. You might have this risk-o-meter in a newspaper advertisement of a mutual fund or in the scheme document of a particular fund.

risk o meter

The risk-o-meter with different labels of risk is depicted as below:

  • Low: Principal at low risk
  • Moderately low: Principal at moderately low risk
  • Moderate: Principal at moderate risk
  • Moderately High: Principal at moderately high-risk
  • High: Principal at high risk

Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand, they must consider the track record of the mutual fund and should take objective and informed decisions.

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Author and Assistant Professor in Finance, Ardent fan of Arsenal FC. Always believe "The only good is knowledge and the only evil is ignorance - Socrates"
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