The riskometer is the six-level gauge on every mutual fund scheme, running from Low through Low to Moderate, Moderate, Moderately High and High up to Very High. Since a SEBI circular dated 5 October 2020, effective 1 January 2021, the reading is holdings-based, computed from what the fund actually holds rather than from its category label and it is re-evaluated every month. Any change is disclosed within ten days of the month end and unitholders are notified.
That monthly cadence is the part most explainers miss. A scheme's riskometer can drift as its portfolio shifts and a move up or down is itself a signal about how the fund is being run. A Very High reading is not a verdict of a bad fund either. It describes the volatility of the asset mix, so a small-cap equity fund sitting at Very High is behaving exactly as its mandate intends.
A fund reading Moderately High in January can be re-labelled High by March if its holdings tilt toward lower-rated debt or smaller companies and the AMC has to disclose the change within ten days of the month end.
Where It Shows Up #
The riskometer appears on scheme factsheets, the scheme information document and every fund page. FinSet tracks month-to-month changes in the riskometer drift guide.
The Source #
SEBI circular SEBI/HO/IMD/DF3/CIR/P/2020/197, 5 October 2020, effective 1 January 2021. Issuing authority.
Related on FinSet #
This entry is general education, not personal advice or a recommendation of any scheme. Mutual fund investments are subject to market risks. Read all scheme related documents carefully.