AMFI Registered Mutual Fund Distributor
Risk Profiling and Suitability
Risk Profiling and Suitability
Every investor serviced by us completes a risk profile before the first transaction is placed. Your answers are scored, the result is explained to you, and the completed profile is signed by you and preserved on our file. The profile is offered for review at least once every twelve months, and it is refreshed whenever you tell us of a material change in your financial or personal circumstances.
Purpose
Before suggesting any scheme, we assess how much risk an investor is able to take and how much risk the investor is willing to take. This policy explains how that assessment is done, how the result is used, and how often it is reviewed. It follows the principle of appropriateness under the AMFI Master Circular for Mutual Fund Distributors.
Three parts of risk
Risk capacity: The financial ability to absorb a loss - assessed from age, income and expenses, savings, existing investments, loans, and the number of financially dependent members.
Risk tolerance: The willingness to accept ups and downs - assessed from investment experience and the investor's stated response to a fall in the value of investments.
Risk required: The risk that the investor's goals actually need - assessed from the goal, the amount needed and the time available.
How the assessment is done?
The investor completes our Risk Profiling Questionnaire, either on paper or through the online form on our platform. The questions cover age, occupation and stability of income, income and expenses, dependants, existing investments and loans, investment horizon, investment experience, the purpose of the investment, and the investor's reaction to a temporary fall in value. The questionnaire is completed by the investor personally; for joint holders it is completed by the first holder.
Based on the responses, the investor is placed in one of five categories: Conservative Portfolio (Low), Balanced Portfolio (Moderate), Moderate Aggressive (Moderate High), Aggressive Portfolio (High) or Very Aggressive Portfolio (Very High). The category is explained to the investor in plain words, and the investor signs the Risk Profile Declaration confirming that the category has been understood.
How the result is used?
Each category is mapped to a model asset allocation between equity, debt and cash, and to the scheme categories and Riskometer levels that suit it. Conservative investors are shown liquid, overnight and short-duration debt schemes; Balanced investors are shown hybrid and diversified equity schemes alongside debt; Aggressive and Very Aggressive investors may also be shown mid-cap, small-cap, sectoral and thematic schemes. We suggest schemes only from within the mapping for the investor's category.
If an investor chooses a scheme outside his or her category, we inform the investor in writing that the scheme is unsuitable, explain the risk, and proceed only after receiving the investor's written confirmation. The unsuitability communication and the confirmation are kept on record.
Review
The risk profile is reviewed once a year, and earlier whenever the investor informs us of a change in income, employment, goals, family situation, health or liabilities, or when the investor asks for a review. A changed profile leads to a review of the existing holdings, and any change suggested is explained to the investor in writing.
Non-individual investors
For companies, partnerships, LLPs, trusts and other non-individual investors, the investment intention, time horizon and liquidity needs stated by the authorised signatories are recorded in place of a personal risk profile, and schemes are suggested in line with that record.
Records
The completed questionnaire, the category assigned, the signed Risk Profile Declaration, every unsuitability communication and every review note are kept in the investor's file for the period required under SEBI and AMFI rules.
1. What the Questionnaire Covers
The profile is a written questionnaire covering your age, your investment experience, how you have behaved when markets have fallen, the fall in value you are able to bear, the stability of your income, the emergency funds and obligations you carry, the return you expect, the period for which you can stay invested, and your understanding of the markets.
2. Risk Profile & Indicative Asset Mix
| Score | Risk Profile | Investor Type | Equity | Debt |
|---|---|---|---|---|
| 0 - 25 | Low | Conservative Investor Portfolio | 25% | 75% |
| 26 - 50 | Low to Moderate | Balanced Investor Portfolio | 50% | 50% |
| 51 - 65 | Moderate to High | Moderate Aggressive Investor Portfolio | 65% | 35% |
| 66 - 80 | High | Aggressive Investor Portfolio | 75% | 25% |
| 81 - 100 | Very High | Very Aggressive Investor Portfolio | 90% | 10% |
For this purpose, equity includes equity mutual funds, shares and stocks. Debt includes debt mutual funds, fixed deposits, Public Provident Fund, gold, bonds, Post Office Monthly Income Scheme, National Savings Scheme and real estate. These percentages are indicative starting points for discussion, not fixed formulas and not an assurance of any allocation, return or outcome. The actual mix is adjusted for your goal horizon, your liquidity needs, your existing holdings and your life stage.
3- Investment Profile by Investor Type & Suitability
| Investor Type | Investment Profile | Equity | Scheme Categories | Riskometer |
|---|---|---|---|---|
| Conservative |
Objective: Current income Assets: Mostly fixed-income securities, some equities Risk: Low - not willing to tolerate investment loss Indicative short-term drawdown tolerance: 0-15% |
Up to 25% | Overnight, Liquid, Ultra Short Duration, Low Duration, Money Market, Arbitrage, Conservative Hybrid etc. | Low to Moderate |
| Balanced |
Objective: Balance of current income and capital appreciation Assets: Mix of equities and fixed-income securities Risk: Moderate - willing to tolerate some short-term price fluctuation Indicative short-term drawdown tolerance: 10-25% |
Up to 50% | The above, plus Short Duration, Corporate Bond, Banking and PSU Debt, Equity Savings, Balanced Advantage, Aggressive Hybrid, Large Cap Index etc. | Low to Moderately High |
| Moderately Aggressive |
Objective: Capital appreciation, secondary importance on current income Assets: Mix of equities and fixed-income securities Risk: Moderate - willing to tolerate short-term price fluctuation Indicative short-term drawdown tolerance: 15-35% |
Up to 65% | The above, plus Large Cap, Large and Mid Cap, Flexi Cap, Multi Asset Allocation, Dynamic Bond etc. | Moderate to High |
| Aggressive |
Objective: Long-term capital appreciation Assets: Mostly equities Risk: High - willing to tolerate large price fluctuations Indicative short-term drawdown tolerance: 15-45% |
Up to 75% | The above, plus Multi Cap, Mid Cap, Focused, Value or Contra, ELSS etc. | Moderately High to Very High |
| Very Aggressive |
Objective: Maximum long-term capital appreciation Assets: Primarily equities Risk: High - willing to tolerate substantial price fluctuation Indicative short-term drawdown tolerance: 15-50% |
Up to 90% | The above, plus Small Cap, Sectoral or Thematic, Overseas Fund of Funds etc. | High to Very High |
3- Investment Profile by Investor Type & Suitability
The drawdown ranges above are illustrative bands used to align expectations during profiling. They are not forecasts, limits or guarantees. Actual losses can be larger than the range shown, and no ceiling on loss is implied or offered.
4. Suitability
- The scheme categories presented to you are those that sit within the band of your recorded risk profile.
- The profile is read together with your goal horizon - short (under 3 years), medium (3 to 5 years) or long (over 5 years) - and mapped to suitable scheme categories.
- For a hybrid scheme, the underlying asset allocation must match your profile and your time horizon.
- The Riskometer level of a scheme is shown to you before you invest, together with the scheme's objective, its costs and the risks it carries.
- Where you are invested through a systematic plan, the suitability of the plan is revisited at the annual review along with the profile.
5. Where Your Choice Differs from Your Assessed Profile
You are never prevented from investing in a product of your choice. Where your choice sits outside the categories indicated by your assessed profile, the transaction is treated as execution-only and is recorded in writing, at two points.
5.1 At the time of profiling
The Risk Profiling Questionnaire carries three declarations, of which you sign one. In each case the declaration is signed before any investment is executed and is retained on your file.
- Agreement with the assessed profile - you confirm that the assessed profile is consistent with your requirements, that the concept of investment risk has been explained to you, and that you wish the profile to be applied to your funds available for investment.
- Selection of a different profile - you record that the assessed profile is not consistent with your requirements, nominate the profile you wish to be applied instead, and confirm that you have full knowledge of the investments concerned. Transactions on this basis are execution-only, carried out on your own instruction.
- Non-disclosure of complete financial information - you declare that you do not wish to disclose complete financial information, and acknowledge that the resulting profile may therefore not reflect your actual risk profile. Transactions on this basis are execution-only, carried out on your own instruction.
5.2 Unsuitability
- If you request a scheme that does not align with your recorded risk profile, we will inform you in writing.
- The written communication will specify the aspect of your risk profile that the scheme does not match and explain the associated risk.
- The transaction will be executed strictly on an execution-only basis.
- The communication and your confirmation will be retained in our records and made available for due diligence, wherever required.
- If you decline to complete or update your risk profile, the same will be documented, along with an explanation of the implications.
5.3 Where you decline to complete or update your profile
That fact is recorded on your file and the position is explained to you in writing.
6. Records
The completed questionnaire, the assessed profile, the signed declaration and any unsuitability communication are retained as part of your file, and are available to you on request.
7. Important Information
Risk profiling is carried out only to help identify the product categories that suit your stated circumstances. The final investment decision rests with you. No guarantee is given as to the accuracy or completeness of any suggestion arising from the profiling questionnaire, and the investor types, risk profiles and asset allocations described on this page are illustrative - they are used to structure the profiling conversation and are not a guarantee of returns or protection against loss. Investments are not the same as bank deposits. They are not obligations of, and are not guaranteed or insured by, any government or insurance company unless expressly stated otherwise. The value of investments can rise or fall, and past performance does not indicate future results. No indicative or assured returns are offered.
Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. All applications are subject to the terms and conditions of the respective products.