Sarfras

Understanding Riskometer in Mutual Funds: A Guide to Risk Levels

The Riskometer is a valuable tool for investors, designed to help them gauge the level of risk associated with different mutual funds. Launched by SEBI, it provides a clear, visual representation of risk levels, allowing investors to make informed decisions that align with their risk tolerance and financial goals. Here’s a breakdown of the Riskometer categories and what each level means:

1. Low Risk

• Description: Suitable for investors looking for stability, low-risk funds invest in safe instruments like government securities or highly-rated corporate bonds.
• Investment Example: Liquid funds, overnight funds, and money market funds often fall into this category.
• Ideal For: Investors with a very low risk tolerance, such as retirees or those seeking to preserve capital.

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What is Beta in Mutual Funds? A Key Factor for Investors

In mutual funds, Beta is a measure of a fund’s sensitivity to market movements and is used to gauge the fund’s volatility in comparison to a benchmark index, such as the Nifty 50 or the S&P 500. Beta helps investors understand how much a mutual fund might fluctuate relative to the overall market.

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