Mutual Fund Risk-o-Meter Changes: What Investors Need to Know

Several mutual fund houses, including HDFC, ICICI Prudential, Quant, Aditya Birla Sun Life, and Franklin Templeton, have updated the risk-o-meters for numerous schemes in November 2026. These revisions affect various categories such as equity, debt, hybrid, gold, and fund-of-funds, according to Livemint Money. For ordinary investors, these changes are crucial as the risk-o-meter serves as a key indicator to gauge a scheme's risk level, aligning it with their personal risk appetite.

It is important to understand that a change in risk rating does not necessarily alter a scheme's fundamental investment objective. Instead, these revisions largely reflect a re-assessment of the risk within the underlying portfolios. For example, HDFC Mutual Fund adjusted four schemes based on portfolios as of October 31, 2026. Its HDFC Dynamic Term Fund saw its risk reduced from moderately high to moderate, while the HDFC Multi-Asset Active Fund of Funds increased from high to very high. HDFC Nifty Large Midcap 250 Plus 8-13 yr G-Sec 70:30 Index Fund also moved to very high risk, with HDFC NIFTY SDL Plus G-Sec Jun 2027 40:60 Index Fund reducing from low to moderate to low.

ICICI Prudential Mutual Fund also revised four schemes on November 7, 2026, based on October 31 portfolios. Both ICICI Prudential Gold ETF Fund of Fund and ICICI Prudential Multi-Asset Active Fund of Fund shifted from high to very high. Notably, two life-cycle schemes, ICICI Prudential Life Cycle Fund 2036 and ICICI Prudential Life Cycle Fund 2041, moved from moderate and moderately high, respectively, to very high. Investors in life-cycle funds should specifically check the latest portfolio and asset allocation, as the fund's year in its name does not automatically dictate its current risk.

Quant Mutual Fund reduced the risk-o-meter for its Quant Income Plus Arbitrage Fund of Fund from moderate to low to moderate, announced on November 6. Aditya Birla Sun Life Mutual Fund made four revisions on November 6, based on October 30 portfolios. Its Liquid Fund increased from moderate to moderately high, a significant change for funds often used for short-term savings. The Aditya Birla Sun Life Gold Fund, however, saw its rating fall from very high to high. Franklin Templeton Mutual Fund also revised three schemes on November 6, including Franklin India Conservative Hybrid Fund moving to moderately high.

SEBI mandates mutual funds to disclose these risk-o-meters, categorizing risk into six levels: Low, Low to moderate, Moderate, Moderately high, High, and Very high. This assessment considers market, credit, interest-rate, and liquidity risks. A change in the risk-o-meter alone is not a direct signal to buy or sell. Investors should instead examine the latest portfolio to see if changes reflect shifts in equity exposure, debt duration, or credit quality. Comparing the scheme's benchmark risk is also advised.

Editor's note: The draft provides a thorough summary of the risk-o-meter changes using the specific data provided in the text.