Monday, 6 May 2013

Mutual Funds Colour Coding All you need to Know

Mutual Funds Colour Coding:-  All you need to know

SEBI has created  new guidelines and colour coding for all types of Mutual Funds .
there are only three colours Brown,Yellow,Blue. From June onwards it will be Implimented.

 Blue Colour Indicates Less Risk. That means a retired person can Invest in these Products
Eg:Gilt Funds,Debt Funds,Fixed Maturity Plan,Income Fund, Liquid funds these will carry BLUE color

Yellow Colour will Indicate Meduim Risk Associated with that product
Eg:Hybrid Funds like Monthly Income Plan (MIP),Balanced Funds etc....

Brown Colour will Indicate High Risk and not recommended for Retired Persons
Eg: Equity Oriented, Sectorial Funds,  Index fund,  large-cap fund,  small-cap funds
Below documents and Images were downloaded from sebi website please refer to it, if problem with viewing documents/images click here

But I think Only three Colours will not going to help.. this is really Insane. Lets look at it, Index fund has less risk than the Sectorial funds but these will be considered as the Same risk(Brown), and Hybrid Funds where there is 70% equity and there are some funds where there is only 10% equity these are also rated as same(Yellow)..

If  there were more colours it would have been better but we can’t do anything...As a Financial Planner what I would request is Please Do your research well or Consult your Financial Adviser, these colours are just a glimpse and not show us the exact picture.

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Abdul Zelani.