The little speedometer on every scheme document is the single most useful thing on the page. Here is what each level means and how to use it.
What it is
SEBI requires every mutual fund scheme to show a Riskometer: a dial with six levels from Low to Very High. It is recalculated every month from what the fund actually holds, so it reflects the portfolio today, not a marketing claim.
The six levels
- Low — overnight funds. Money parked for days.
- Low to Moderate — liquid and ultra-short debt funds.
- Moderate — short-duration and corporate bond funds.
- Moderately High — conservative hybrid funds, some long-duration debt.
- High — balanced and aggressive hybrid funds.
- Very High — almost all equity funds, including index funds.
Why index funds are 'Very High'
Because shares are. The Nifty 50 fell about 38% in early 2020 and recovered within a year. Very High means the value will swing; it does not mean the fund is badly run. The question is whether you can leave the money alone through a swing like that — which is why horizon matters more than the label.
How to use it
Match the level to your date. Money needed within three years should live in the first three levels. Money you will not touch for a decade can sit at Very High. If a fund's Riskometer rises over time, it has started holding riskier assets — worth a question to your associate.
Where to find it
On the scheme's factsheet, the KIM, and on every Krore fund page, next to the expense ratio and exit load — see an example.