Riskometer tells you all about MFs

Mumbai, April 30: To help investors better understand risks involved in mutual fund investments, regulator Sebi on Thursday replaced the mandatory colour codes with a ‘ riskometer’ containing five levels of risks from low to high.

The mutual funds would need to mention the risk level of a scheme through a speedometer-like mechanism, while specifying whether the investment was of low or high risk in nature.

The five risk levels would be low, moderately low, moderate, moderately high and high.

The new system would replace the existing practice of colour-coding the schemes wherein the funds needed to be given blue, yellow and brown codes to indicate low, medium and high risk respectively.

The guidelines would be effective from July 1, 2015, for all existing and forthcoming schemes, the Sebi said in a circular.

The level of risk in mutual fund schemes has been increased to five categories from the current three.