How to Read the Mutual Fund Riskometer
Published 2026-10-16 · Aadarna Stock Broking Pvt. Ltd.
Key takeaways
- Every mutual fund scheme must display a riskometer showing its level of risk.
- There are six levels, from Low to Very High.
- The riskometer is reviewed regularly and can change as the scheme's portfolio changes.
- Compare the scheme's risk level with your own goals, time horizon and comfort with losses.
Mutual fund schemes differ hugely in how risky they are. The riskometer is a simple visual scale that every scheme must show, so investors can see its risk level at a glance. This guide explains what it means and how to use it.
What is the riskometer?
The riskometer is a dial-shaped graphic that shows where a scheme sits on a scale of risk. SEBI requires fund houses to display it on scheme documents, factsheets, websites and advertisements.
The risk level is worked out using rules set by SEBI, based on the investments the scheme actually holds, such as how volatile the shares are, the credit quality of bonds and how easily the holdings can be sold.
The six levels
- Low
- Low to Moderate
- Moderate
- Moderately High
- High
- Very High
A higher level means the value of your investment can rise and fall more sharply, and the chance of losses over shorter periods is greater. Even schemes at the lower levels can lose value; low risk does not mean no risk.
Where to find it
- On the scheme's page on the fund house's website.
- In the monthly factsheet.
- In the Scheme Information Document and Key Information Memorandum.
- On the AMFI website and in most investment apps.
Why the riskometer can change
Because the riskometer is based on what the scheme holds, it is reviewed regularly. If the portfolio changes, for example if a scheme takes on riskier holdings, its level can move up or down. Fund houses must inform investors when the risk level changes, and they publish the history of changes.
So check the riskometer not only when you invest but also from time to time while you stay invested.
Matching it to yourself
The riskometer describes the scheme, not you. To use it well, ask yourself:
- How long can I leave this money invested without needing it?
- How would I feel, and what would I do, if the value fell sharply in the next year?
- Is this money for an important goal with a fixed date, such as a child's education?
- Does the scheme's risk level fit those answers?
Generally, money needed soon is less suited to high-risk schemes, because there is less time to recover from a fall. These are personal decisions; the riskometer is a tool to help you think them through.
Using the riskometer across your investments
Most people hold more than one scheme. Looking at each riskometer separately can hide the overall picture. If most of your money sits in schemes at the High or Very High levels, your total savings can swing sharply even if each scheme on its own looked acceptable when you bought it.
A simple exercise is to list your schemes, note each one's current risk level and the amount invested, and see where most of your money is. Then ask whether that overall mix still fits your goals and the time you have. Repeat it once a year, or whenever you receive a notice that a scheme's risk level has changed.
Remember that the riskometer is one input. Read the Scheme Information Document for the full picture of what each scheme can invest in.
What the riskometer does not tell you
- It does not predict how the scheme will perform.
- It does not show costs; check the expense ratio separately.
- It does not tell you whether the scheme fits your overall portfolio.
Frequently asked questions
Can a Low risk scheme lose money?
Yes. Low risk does not mean no risk. The value of any mutual fund investment can fall.
Does a Very High risk scheme mean higher returns?
Not necessarily. It means the value can fluctuate a lot, both up and down. Higher risk does not ensure higher returns.
What is the benchmark riskometer?
Fund houses also show the risk level of the scheme's benchmark index, so you can compare how risky the scheme is relative to the market segment it tracks or is measured against.