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SEBI has released a consultation paper where it has proposed to colour code the risk-o-meter of mutual fund schemes based on the recommendations made by the Mutual Fund Advisory Committee (MFAC).
The regulator aims to standardize the format of disclosure and simplify the existing risk-o-meter framework to make it easy to understand.
The six colours proposed for the risk levels are:
- Low risk – Irish green
- Low to moderate risk – Chartreuse
- Moderate risk – Neon yellow
- Moderately high risk – Caramel
- High risk – Dark orange
- Very high risk – Red
The regulator has also proposed that AMCs communicate the change in risk-o-meter of the scheme to its unitholders alongside the old risk-o-meter through email or SMS.
The proposed change looks like the image below.
You can comment on the changes proposed by this consultation paper before October 18 on this link.
