Riskometer – What It Really Means for You

Introduction

" Ever noticed the color-coded dial on your mutual fund factsheet? That’s the Riskometer, a SEBI-mandated tool that shows how risky your fund is. But many investors either ignore it or misinterpret it. 

 In this post, we decode the Riskometer — what the labels mean, how it’s calculated, and what it means for your investment goals.

What Is the Riskometer?

The Riskometer classifies a mutual fund into six risk categories:

• Low
• Low to Moderate
• Moderate
• Moderately High
• High
• Very High
It considers volatility, asset class, duration, and credit risk.

✅ Why It Matters

• Helps match your risk appetite with the fund’s profile
• Crucial for goal-based investing
• Indicates how volatile your NAV journey may be

• Anjali, age 50, needs stable income. She picks a “Moderate” risk hybrid fund.
• Rajat, age 28, aims for high growth and chooses a “Very High” risk mid-cap fund.

  Conclusion 

 The Riskometer is your first filter — it tells you if the fund’s temperament suits yours. Ignore it, and you might invest in a fund that makes you lose sleep.

Don’t just see the return chart. Look at the Riskometer. Let it guide your choices based on age, goals, and risk tolerance.

Summary Table: Riskometer Breakdown