Risk in Mutual Fund investment will be identified and easy, SEBI sets these rules

SEBI has asked for a change in the scale of risk measurement so that mutual funds investors identify risks properly. According to the circular issued by SEBI, all mutual funds will now have to show 6 signs in the risk-o-meter instead of 5. According to the circular of SEBI, now there will also be an indication of very high risk. For all schemes of mutual funds, it will be necessary to indicate a very high risk from January 1. It will be necessary to do the same for new schemes as well as old schemes. If you want mutual funds, you can adapt it even before that. Rules will be implemented from the new year 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 at the beginning of the business year and what was the change in that meter at the end of the business year and how many times it happened. The signs have to be clearly shown Mutual funds will have to give details in the application form and all important documents related to the scheme while bringing a new issue. The sign of risk-o-meter will also have to be clearly mentioned near the name of the scheme. Also, it will have to be given clear information in advertisements as well. So that investors can understand easily and they don't have any kind of dilemma. A change in the risk-o-meter does not mean that the fundamentals of the scheme are considered to have changed. What are the signs now? Right now low risk, low to moderate risk, moderate risk, moderate to high risk and high risk are indicated. Now another sign of new year will be of very high risk. That is, there will be 6 signs now instead of five. How it can be tested in debt? SEBI has also given full details of the risk on the risk-o-meter. For example, if there is a debt security, then credit value, interest rate value and liquidity value will be important parameters. Credit risk will determine the risk based on the credit rating. Whereas the duration of the portfolio will be made the basis for interest rate. The maturity of the cash flow of a bond is derived from the Macaulay duration. Whereas to remove the liquidity, besides the credit rating, the position of the listing and the structure of the debt will be made the basis. How will risk be tested 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. There will be a similar scale for newly listed shares. SEBI has set the benchmark for equity derivatives segment, index and stock futures, index and stock options, REITs and InvITs as well as gold, foreign securities and mutual fund schemes.