Every investor is risk-profiled before any Mutual Fund scheme is suggested or placed. The profile tells us how much investment risk the investor can take and is willing to take.
How We Assess Risk
The investor completes a short Risk Profiling Questionnaire covering age, income and its stability, dependants, existing savings, investment horizon, investment knowledge, reaction to a fall in value and return expectation. The responses place the investor in one of five risk categories.
Risk Category | What it means | Equity exposure |
Conservative | Capital safety comes first; very low tolerance for fall in value. | Very low |
Moderately Conservative | Some growth wanted, but limited tolerance for volatility. | Low |
Moderate | Balanced growth and stability over a medium horizon. | Medium |
Moderately Aggressive | Growth is the priority; can accept short-term volatility. | High |
Aggressive | Long horizon; can accept large short-term falls for higher long-term growth. | Very high |
How the Profile Is Used
- Schemes are suggested only from the fund categories allowed for the investor’s risk category, as per our Suitability Matrix.
- The investor signs the Risk Profile Declaration confirming the category assigned.
- If the investor insists on a scheme above the assigned category, we issue a written Unsuitability Communication and proceed only after the investor’s written confirmation that the decision is their own.
- Risk profiling is repeated every year, and earlier if the investor’s income, goals, family situation or health changes materially.
- Completed questionnaires and declarations are kept in the investor file for at least five years.