Very High Risk: In the last few years, mutual funds have increased the attractiveness of investors. Investment in mutual fund schemes is increasing continuously. But many times investors do not recognize the risk present in it and take the loss. In order to enable investors to identify the risks of mutual funds properly, market regulator SEBI has introduced a “very high risk” category to warn investors.
According to the circular issued by SEBI, all mutual funds will now have to show 6 signals in the risk-o-meter instead of 5. According to the circular of SEBI, now there will also be a sign of “very high risk”. It will be necessary to do the same for new schemes as well as old schemes. Explain that there are 5 existing categories to measure risk so far. Low, Moderate Low, Moderate, Moderate High and High. Now very high will also be added to it.
Will be effective from 1 January
This risk-o-meter has to be reviewed every month for all mutual funds. The change will have to be communicated to all unitholders via e-mail or SMS. The details of the portfolio will also have to be reported within 10 days of the completion of the month and on the AMFI website. AMFI is an organization of mutual funds. Also, details of this will have to be shared even after the end of the business year. In which it has to be told what was in the beginning of the business year and what was the change in risk-o-meter at the end of the business year and how many times it happened.
What will happen in date categories?
SEBI has given information about the risk on the risk-o-meter. If there is a debt security, then credit risk value, interest rate risk value and liquidity risk value will be important parameters. Credit risk will determine the risk based on the credit rating. Whereas the Macaulay durations of the portfolio will be made the basis for interest rate risk. The maturity of the cash flow of a bond is derived from the Macaulay durations. Whereas to remove the liquidity risk, besides the credit rating, the position of the listing and the structure of the debt will be made the basis.
What will happen in equity
Similarly, market capitalization, volatility and impact cost have been measured in the equity segment. Market capitalization data will be determined by the half-yearly report of AMFI. Whereas for volatility, the daily price fluctuations will be the basis. However, two-year data will be made the basis for this. Whereas the impact cost will be determined by how much it costs to sell and buy the stock. It is based on the liquidity of the stock.
#High #Risk #types #risk #mutual #funds