Sebi mulls standardise format for disclosure of change in MF risk-o-meters

To further enhance the pictorial representation of risk, Sebi on Thursday proposed that the risk-o-meter of a mutual fund scheme be depicted using a colour scheme, a move aimed at further aiding in informed decision making by investors.

To standardise the format of disclosure and for ease of understanding of the change in level of risk for unitholders, the mutual funds should disclose the existing risk-o-meter, along with the revised risk-o-meter, Sebi suggested in its consultation paper.

Any change in risk-o-meter of the scheme or its benchmark should be communicated by way of notice and by way of an e-mail or SMS to unitholders of that particular scheme.

In addition to the existing labels relating to levels of risk -- low, low to moderate, moderate, moderately high, high and very high, the risk-o-meter should also be depicted using a colour scheme.

Risk-o-meter needs to have six levels of risk for mutual funds -- green for low risk Irish; chartreuse for low to moderate risk; neon