Level of risk to the principal invested in the mutual fund schemes depicted through a pictorial meter known as 'Risk-o-meter'.
The'Risk-o-meter' categorizes risk in one of the following 6 levels - Low Risk, Low to Moderate Risk, Moderate Risk, Moderately High Risk, High Risk, Very High Risk. Any change in the risk-o-meter of a scheme should be communicated to its respective unit holders.
Mutual Funds/AMCs should evaluate the risk-o-meter of their schemes on a monthly basis and disclose the same on their respective websites and AMFI website.
All debt schemes are to be classified in terms of a Potential Risk Class matrix (PRC) consisting of parameters based on maximum interest rate risk (measures by Macaulay Duration of the scheme) and maximum credit risk
The PRC matrix should be prominently published in the scheme related documents and common application form for the scheme. Mutual Funds should publish the PRC matrix in their scheme-wise Annual Reports and Abridged Summary.
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