What is a Riskometer in mutual funds? (2026)
To answer what is a riskometer: it is the standard risk label SEBI requires on every mutual fund scheme, a six-level scale from Low to Very High. It is meant to show, at a glance, how risky a scheme's current portfolio is relative to others. Since 1 January 2021, the reading is based on the securities the scheme actually holds and is refreshed every month, so it moves as the portfolio moves.
Definition
A riskometer
is SEBI's mandatory six-level risk label on every mutual fund scheme: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. Fund houses set it from the scheme's actual portfolio and update it monthly within 10 days of month-end. Source: SEBI.
What do the riskometer levels mean?
The riskometer ranks relative risk, not the odds of loss. The six levels, from lowest to highest, are Low, Low to Moderate, Moderate, Moderately High, High, and Very High. A liquid or overnight debt scheme typically sits near the bottom, while a small-cap or sector equity scheme usually sits near the top. The level is a comparison tool across schemes, not a promise about any one of them.
6 levels
Riskometer risk bands SEBI requires on every scheme, effective 1 January 2021
Source: SEBI riskometer framework
How is a scheme's riskometer set?
The reform that took effect on 1 January 2021 changed the basis of the label. The earlier riskometer assigned risk by scheme category. The current one scores the actual portfolio each month: for debt, on credit risk, interest-rate risk, and liquidity risk; for equity, on factors such as market capitalisation and volatility. Fund houses then disclose the level within 10 days of month-end, alongside the portfolio, and must tell unit holders whenever it changes. Fund houses also report, once a year, how many times a scheme's risk level changed during the financial year.
For the debt side, the credit-risk input connects to what a credit rating measures. The riskometer itself appears in the scheme's Scheme Information Document and its Key Information Memorandum, and it is refreshed on the monthly factsheet.
Reading the riskometer without over-reading it
A few practical points keep the label in perspective:
- It is relative, not absolute. Low means lower risk than higher bands, not no risk.
- It can change. A scheme can move up or down a level as its holdings change, so check the as-of month.
- It describes risk, not return. The label says nothing about expected performance.
So, what is a riskometer in one line: a monthly, portfolio-based, six-level SEBI risk label, useful precisely because it is standardised and dated. Flock reads public filing data and keeps every figure stamped with its source and date. What any of it means for you is your call to make.
Frequently asked questions
How many levels does the riskometer have?
The riskometer has six levels: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. SEBI's framework, effective 1 January 2021, replaced the earlier five-level, category-based label with one based on the scheme's actual portfolio. Source: SEBI.
How often is the riskometer updated?
Fund houses evaluate the riskometer every month based on the scheme's portfolio and disclose it within 10 days of month-end, alongside the portfolio disclosure. Any change from the prior month must be communicated to unit holders. Source: SEBI.
What is the riskometer based on?
For a scheme's risk level, fund houses score the underlying portfolio on measures such as credit risk, interest-rate risk, and liquidity risk for debt, and market capitalisation and volatility for equity. The label reflects the portfolio held, not the scheme's category. Source: SEBI.
Does a low riskometer reading mean a scheme is safe?
No. The riskometer ranks relative risk on a six-point scale, not safety. A Low or Low to Moderate reading still carries risk, and the level can change month to month as the portfolio changes. It is a disclosure, not a guarantee. Source: SEBI.
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Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.