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With reference to mutual funds “risk-o-meter”, consider the following statements:
1. The risk-o-meter must be evaluated only on a yearly basis.
2. All mutual funds shall, beginning January 1, assign a risk level to their schemes at the time of launch, based on the scheme’s characteristics.
Which of the statements given above is/are correct?
  • a)
    1 only        
  • b)
    2 only        
  • c)
    Both 1 and 2        
  • d)
    Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
With reference to mutual funds “risk-o-meter”, consider th...
Securities and Exchange Board of India’s (SEBI’s) decision on the “risk-o-meter”, which it announced on October 5, 2020, came into effect on January 1.
  • In its circular issued on October 5, the regulator made it mandatory for mutual fund houses to characterise their schemes' risk level on a six-stage scale from “Low” to “Very High”.
  • All mutual funds shall, beginning January 1, assign a risk level to their schemes at the time of launch, based on the scheme’s characteristics.
  • The risk-o-meter must be evaluated on a monthly basis.
  • Fund houses are required to disclose the risk-o-meter risk level and the portfolio disclosure for all their schemes on their own websites and the website of the Association of Mutual Funds in India (AMFI) within 10 days of the close of each month.
  • Any change in the risk-o-meter reading with regard to a scheme shall be communicated to the unit-holders of that scheme.
  • The move will help investors to make a more informed investment decision.
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With reference to mutual funds “risk-o-meter”, consider the following statements:1. The risk-o-meter must be evaluated only on a yearly basis.2. All mutual funds shall, beginning January 1, assign a risk level to their schemes at the time of launch, based on the scheme’s characteristics.Which of the statements given above is/are correct?a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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