What is the Riskometer?
SEBI requires every Indian mutual fund scheme to carry a standardized risk label - the Riskometer - set on a six-level scale: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. The level is derived from the scheme’s actual portfolio (asset class mix, credit quality for debt, market-cap tilt for equity) and its historical volatility, recalculated and re-disclosed monthly - it isn’t a one-time label an AMC sets at launch and forgets.
Before the Riskometer (introduced 2013, overhauled 2021), risk disclosure varied by AMC and was easy to gloss over in marketing material. A standardized, independently-derived scale lets an investor compare risk across AMCs and fund types on the same terms - the same way a nutrition label standardizes what’s on a food package regardless of brand.
Real Riskometer ratings across 6 funds
| Fund | Category | Riskometer |
|---|---|---|
| Parag Parikh Flexi Cap | Flexi Cap | Very High |
| DSP Value | Value | Very High |
| ICICI Prudential Value | Value | Very High |
| SBI Focused | Focused | Very High |
| Parag Parikh ELSS Tax Saver | ELSS | Very High |
| SBI Multicap | Multi Cap | Very High |
All 6 funds here are equity schemes, which is why every one shows “Very High” - SEBI’s methodology rates virtually all pure-equity schemes at the top of the scale regardless of market-cap or style, since equity as an asset class carries materially more short-term volatility than debt or hybrid allocations. A debt fund’s own Riskometer level depends heavily on its credit-quality and duration profile instead - see the Credit Quality and Duration glossary entries for how that’s classified.
Reading the spread
Across these 6 funds, 3-year standard deviation runs from 9.74% (Parag Parikh Flexi Cap) to 12.51% (SBI Multicap), a gap of 2.77%. The middle value is 10.82%, with 3 of 6 above it. Neither end is better or worse in itself; the number describes how a fund behaves, and what matters is whether that matches what you want.
How to use it in practice
The Riskometer is SEBI’s six-level label of a fund’s risk, from Low to Very High, shown on every scheme. It gives a quick, standard view of how much a fund can swing, and is a useful first check on whether a fund fits your tolerance. For debt funds it also links to the Potential Risk Class.
Common mistakes
The label is a broad category, so two funds with the same Riskometer level can behave quite differently, and many equity funds sit at Very High. It is updated periodically, not live. Use the risk numbers such as standard deviation and maximum drawdown to see more detail within a level.
Frequently asked questions
What are the Riskometer levels?
Low, Low to Moderate, Moderate, Moderately High, High and Very High.
Who sets the Riskometer level?
The fund house assigns it using a method specified by SEBI, and it is reviewed periodically.
Does a Very High Riskometer mean I will lose money?
No. It means the fund can see large price swings, so it needs a long horizon. Many equity funds carry this label.
WHAT THIS MEANS FOR YOU A “Very High” Riskometer rating doesn’t mean a fund is poorly run - it’s describing the asset class’s inherent volatility, not fund quality. Use it to check that a fund’s risk level actually matches your own time horizon and risk appetite, not as a quality signal on its own; pair it with the fund’s real Sharpe Ratio, Max Drawdown, and category peers for that.
METHODOLOGY Riskometer level as disclosed by each AMC per SEBI’s standardized methodology, as of 2026-08-31. Data: AMFI/SEBI disclosures via Punji. Not investment advice.