New Delhi: Tata Mutual Fund and Union Mutual Fund have announced revision of the risk-o-meter of some of their schemes. It was introduced to reflect the change in risk levels of these schemes after evaluation.
The Risk-O-Meter, introduced by SEBI, gives investors an overall idea of the risk associated with a scheme. Mutual Fund AMCs are displaying a pictorial Risk-O-Meter for all their schemes in the monthly factsheet from January 2021 onwards. The Risk-O-Meter comes with six levels of risk – low, low to medium, medium, medium high, high and very high. It is an indicator of the risk associated with the portfolio of the mutual fund scheme and not the category to which the scheme belongs.
The Risk-O-Meter takes into account factors such as market capitalization, impact cost and volatility to measure the risk level of an equity fund. For debt funds, factors such as credit risk, liquidity risk and interest rate risk are considered to measure the level of risk. SEBI has mandated that the risk-o-meter be reviewed on a monthly basis.
The risk level has been changed from very high to medium high for Tata Balanced Advantage Fund, medium to high to low to medium for Tata Dynamic Bond Fund, and medium to low to medium for Tata Gilt Securities Fund, as per these. Revised Risk-O-Meter for Schemes. This has come into effect from 10 September. That is, the risk levels of all the three schemes have been revised downwards.
Based on the August 31 monthly valuation, the risk-o-meter for Union Balanced Advantage Fund has changed from very high to medium high and for Union Dynamic Bond Fund from low to moderate. In the case of Union Money Market Fund, the risk-o-meter of the benchmark index, CRISIL Money Market Fund BI Index has changed from medium to low to moderate.
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