Level of risk in mutual fund schemes in India
SEBI - Securities and Exchange Board of India
CIRCULAR
CIR/IMD/DF/4/2015 April 30, 2015
All Mutual Funds/Asset Management Companies
(AMCs)/
Trustee Companies/Boards of Trustees of Mutual
Funds/
Association of Mutual Funds of India
Sir/ Madam,
Sub: Product Labeling in Mutual Funds
1. Please refer to SEBI circular no.
CIR/IMD/DF/5/2013 dated March 18, 2013, captioned 'Product Labeling in Mutual
Funds'.
2. In consultation with Mutual Fund Advisory
Committee, SEBI has reviewed the system of product labeling in mutual funds and
in partial modification to the aforesaid circular, it has been decided that:
a. The level of risk in mutual fund schemes shall
be increased from three (3) to five (5)
as under:
i. Low - principal at low risk
ii. Moderately Low - principal at moderately low
risk
iii. Moderate - principal at moderate risk
iv. Moderately High -- principal at moderately
high risk
v. High - principal at high risk
b. The depiction of risk using colour codes would
be replaced by pictorial meter named "Riskometer" and this meter
would appropriately depict the level of risk in any specific scheme. For
enumeration, a scheme having moderate risk would be depicted as under:
Securities and Exchange Board of India Investors understand that their
principal will be at moderate risk
3. Mutual funds may 'product label' their schemes
on the basis of the best practice guidelines issued by Association of Mutual
Funds in India (AMFI) in this regard.
4. This circular shall be applicable with effect
from July 01, 2015, to all the existing schemes and all schemes to be launched
on or thereafter.
However, mutual funds may choose to adopt the
provisions of this circular before the effective date.
5. This circular is issued in exercise of the
powers conferred under Section 11 (1) of the Securities and Exchange Board of
India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds)
Regulation, 1996 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.
Mr. PARAG BASU
Chief General Manager
Tele phone no.: 022 - 2644 9360
Email: paragb@sebi.gov.in
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