A risk profile is one of the most important things to analyse before making an investment. Ideally, experienced investors would know their risk ability, but a newbie would have a very little idea about the risk involved with Mutual Funds or the right mutual fund as per their risk appetite.
In many certains, most of the investors were overconfident at the time of Investing and they turn extremely nervous as the Market becomes volatile. Hence, knowing your risk profile remains at the center stage of any investment.
Especially in the case of mutual fund investment, the suitability of a product largely depends upon the characteristics of the investor. Investors should know their investment objective, how long they wish to invest, ability to tolerate risk, minimum investment amount, etc.
Risk– with respect to investing– is the Volatility or the fluctuation of the prices and/or investment returns. So risk assessment or risk profiling is the systematic evaluation of all the potential risks involved in the investment activity. Risk profiling gives you a clear picture of your risk appetite, i.e. evaluating your risk capacity, your required risk, and your risk tolerance. We will elaborate each term separately.
When an investor conducts their risk profiling, they have to answer a set of questions designed specifically for the purpose. The set of questions differs for different Mutual Fund Houses or distributors. The score of investor after answering the questions determines their Range of taking a risk. An investor can be a high-risk taker, mid-risk taker or can be a low-risk taker.
Once the risk is identified by the risk assessment procedure, that risk is then analysed. It is divided into three broad categories -
Risk capacity is the quantitative measure of taking a risk. It maps your current and future financial position which includes factors like Income, savings, expenses, and liabilities. With these factors evaluated, the rate of returns required to reach your Financial goals is determined. In simple words, it is the level of the Financial Risk you can think of affording.
Risk required is determined by your risk capacity. It is the risk associated with the returns needed to reach your financial targets with available resources. Risk required educates you about what you could potentially be taking on with a certain investment. It gives you an honest perception and a clear picture about the type of the risk you are about to take.
Risk tolerance is the level of risk you are comfortable with. It is simply your willingness to accept the fluctuations in the market that may or may not occur in order to achieve your financial objectives. Risk tolerance can be broadly divided three types
- High-Risk Tolerance
- Mid-Risk Tolerance
- Low-Risk Tolerance
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To determine the category in which you fall there are certain parameters considered
Factor | Influence on Risk Profile |
---|---|
Family Information | |
Earning Members | Risk appetite increases as the number of earning members increases |
Dependent Members | Risk appetite decreases as the number of dependent members increases |
Life expectancy | Risk appetite is higher when life expectancy is longer |
Personal Information | |
Age | Lower the age, higher the risk that can be taken |
Employability | Those with steady jobs are better positioned to take risk |
Psyche | Daring and adventurous people are better positioned mentally, to accept the downsides that come with risk |
Financial Information | |
Capital base | Higher the capital base, better the ability to financially take the downsides that come with risk |
Regularity of Income | People earning regular income can take more risk than those with unpredictable income streams |
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Sub Cat. Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹34.9131
↑ 0.04 ₹297 1.3 5.9 13.7 8.8 0% 1Y 15D Ultrashort Bond Aditya Birla Sun Life Savings Fund Growth ₹553.418
↑ 0.27 ₹20,228 1.8 4.1 8 7.4 7.9 6.72% 5M 26D 6M 29D Ultrashort Bond ICICI Prudential Ultra Short Term Fund Growth ₹27.9402
↑ 0.01 ₹16,051 1.8 3.9 7.5 7.1 7.5 6.79% 5M 12D 7M 24D Ultrashort Bond SBI Magnum Ultra Short Duration Fund Growth ₹6,024.64
↑ 1.31 ₹16,408 1.7 3.8 7.4 7.1 7.4 6.26% 5M 1D 6M 4D Ultrashort Bond Invesco India Ultra Short Term Fund Growth ₹2,719.27
↑ 0.56 ₹1,006 1.7 3.7 7.4 6.9 7.5 6.59% 5M 16D 5M 24D Ultrashort Bond Kotak Savings Fund Growth ₹43.2302
↑ 0.01 ₹15,527 1.7 3.7 7.3 6.9 7.2 6.49% 5M 12D 5M 19D Ultrashort Bond Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 7 Aug 22 Research Highlights & Commentary of 6 Funds showcased
Commentary Franklin India Ultra Short Bond Fund - Super Institutional Plan Aditya Birla Sun Life Savings Fund ICICI Prudential Ultra Short Term Fund SBI Magnum Ultra Short Duration Fund Invesco India Ultra Short Term Fund Kotak Savings Fund Point 1 Bottom quartile AUM (₹297 Cr). Highest AUM (₹20,228 Cr). Upper mid AUM (₹16,051 Cr). Upper mid AUM (₹16,408 Cr). Bottom quartile AUM (₹1,006 Cr). Lower mid AUM (₹15,527 Cr). Point 2 Established history (17+ yrs). Established history (22+ yrs). Established history (14+ yrs). Oldest track record among peers (26 yrs). Established history (14+ yrs). Established history (21+ yrs). Point 3 Rating: 1★ (bottom quartile). Top rated. Rating: 3★ (upper mid). Rating: 3★ (upper mid). Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Low. Risk profile: Moderate. Risk profile: Moderately Low. Point 5 1Y return: 13.69% (top quartile). 1Y return: 8.04% (upper mid). 1Y return: 7.53% (upper mid). 1Y return: 7.44% (lower mid). 1Y return: 7.39% (bottom quartile). 1Y return: 7.30% (bottom quartile). Point 6 1M return: 0.59% (top quartile). 1M return: 0.47% (upper mid). 1M return: 0.46% (upper mid). 1M return: 0.45% (lower mid). 1M return: 0.44% (bottom quartile). 1M return: 0.43% (bottom quartile). Point 7 Sharpe: 2.57 (bottom quartile). Sharpe: 3.55 (top quartile). Sharpe: 2.79 (upper mid). Sharpe: 2.74 (upper mid). Sharpe: 2.72 (lower mid). Sharpe: 2.10 (bottom quartile). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 0.00% (bottom quartile). Yield to maturity (debt): 6.72% (upper mid). Yield to maturity (debt): 6.79% (top quartile). Yield to maturity (debt): 6.26% (bottom quartile). Yield to maturity (debt): 6.59% (upper mid). Yield to maturity (debt): 6.49% (lower mid). Point 10 Modified duration: 0.00 yrs (top quartile). Modified duration: 0.49 yrs (bottom quartile). Modified duration: 0.45 yrs (upper mid). Modified duration: 0.42 yrs (upper mid). Modified duration: 0.46 yrs (bottom quartile). Modified duration: 0.45 yrs (lower mid). Franklin India Ultra Short Bond Fund - Super Institutional Plan
Aditya Birla Sun Life Savings Fund
ICICI Prudential Ultra Short Term Fund
SBI Magnum Ultra Short Duration Fund
Invesco India Ultra Short Term Fund
Kotak Savings Fund
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Sub Cat. HDFC Corporate Bond Fund Growth ₹32.812
↑ 0.06 ₹35,686 1.1 4.4 8.5 7.8 8.6 6.94% 4Y 3M 14D 6Y 10M 20D Corporate Bond Aditya Birla Sun Life Corporate Bond Fund Growth ₹113.766
↑ 0.27 ₹28,675 0.9 4.3 8.4 7.8 8.5 6.94% 4Y 5M 26D 6Y 11M 23D Corporate Bond UTI Banking & PSU Debt Fund Growth ₹22.1463
↑ 0.02 ₹805 1.7 4.7 8.4 7.2 7.6 6.53% 1Y 10M 10D 2Y 1M 13D Banking & PSU Debt HDFC Banking and PSU Debt Fund Growth ₹23.2003
↑ 0.03 ₹6,094 1.2 4.5 8.3 7.4 7.9 6.82% 3Y 8M 23D 5Y 4M 10D Banking & PSU Debt PGIM India Short Maturity Fund Growth ₹39.3202
↓ 0.00 ₹28 1.2 3.1 6.1 4.2 7.18% 1Y 7M 28D 1Y 11M 1D Short term Bond Nippon India Prime Debt Fund Growth ₹60.605
↑ 0.09 ₹9,542 1.4 4.9 9 7.9 8.4 6.93% 3Y 7M 17D 4Y 8M 23D Corporate Bond Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Aug 25 Research Highlights & Commentary of 6 Funds showcased
Commentary HDFC Corporate Bond Fund Aditya Birla Sun Life Corporate Bond Fund UTI Banking & PSU Debt Fund HDFC Banking and PSU Debt Fund PGIM India Short Maturity Fund Nippon India Prime Debt Fund Point 1 Highest AUM (₹35,686 Cr). Upper mid AUM (₹28,675 Cr). Bottom quartile AUM (₹805 Cr). Lower mid AUM (₹6,094 Cr). Bottom quartile AUM (₹28 Cr). Upper mid AUM (₹9,542 Cr). Point 2 Established history (15+ yrs). Oldest track record among peers (28 yrs). Established history (11+ yrs). Established history (11+ yrs). Established history (22+ yrs). Established history (24+ yrs). Point 3 Top rated. Rating: 5★ (upper mid). Rating: 5★ (upper mid). Rating: 5★ (lower mid). Rating: 5★ (bottom quartile). Rating: 4★ (bottom quartile). Point 4 Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Moderately Low. Point 5 1Y return: 8.49% (upper mid). 1Y return: 8.40% (upper mid). 1Y return: 8.36% (lower mid). 1Y return: 8.30% (bottom quartile). 1Y return: 6.08% (bottom quartile). 1Y return: 8.97% (top quartile). Point 6 1M return: 0.10% (bottom quartile). 1M return: 0.07% (bottom quartile). 1M return: 0.30% (upper mid). 1M return: 0.12% (lower mid). 1M return: 0.43% (top quartile). 1M return: 0.20% (upper mid). Point 7 Sharpe: 1.57 (lower mid). Sharpe: 1.66 (upper mid). Sharpe: 2.05 (top quartile). Sharpe: 1.45 (bottom quartile). Sharpe: -0.98 (bottom quartile). Sharpe: 1.90 (upper mid). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 6.94% (upper mid). Yield to maturity (debt): 6.94% (upper mid). Yield to maturity (debt): 6.53% (bottom quartile). Yield to maturity (debt): 6.82% (bottom quartile). Yield to maturity (debt): 7.18% (top quartile). Yield to maturity (debt): 6.93% (lower mid). Point 10 Modified duration: 4.29 yrs (bottom quartile). Modified duration: 4.49 yrs (bottom quartile). Modified duration: 1.86 yrs (upper mid). Modified duration: 3.73 yrs (lower mid). Modified duration: 1.66 yrs (top quartile). Modified duration: 3.63 yrs (upper mid). HDFC Corporate Bond Fund
Aditya Birla Sun Life Corporate Bond Fund
UTI Banking & PSU Debt Fund
HDFC Banking and PSU Debt Fund
PGIM India Short Maturity Fund
Nippon India Prime Debt Fund
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2024 (%) Sub Cat. Aditya Birla Sun Life Medium Term Plan Growth ₹40.2654
↑ 0.07 ₹2,732 1.7 5 13.2 9.4 12.3 10.5 Medium term Bond ICICI Prudential Gilt Fund Growth ₹103.241
↑ 0.40 ₹7,276 0 4.3 8 8.3 6.3 8.2 Government Bond Axis Strategic Bond Fund Growth ₹28.26
↑ 0.04 ₹1,942 1.4 4.8 8.9 7.9 6.9 8.7 Medium term Bond SBI Magnum Gilt Fund Growth ₹65.8758
↑ 0.39 ₹12,149 -1.6 3.1 6.1 7.9 6 8.9 Government Bond ICICI Prudential Medium Term Bond Fund Growth ₹45.2365
↑ 0.08 ₹5,701 1.6 4.7 8.9 7.7 6.9 8 Medium term Bond SBI Magnum Medium Duration Fund Growth ₹51.4913
↑ 0.10 ₹6,506 0.9 4.2 8.1 7.6 6.4 8.1 Medium term Bond Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Aug 25 Research Highlights & Commentary of 6 Funds showcased
Commentary Aditya Birla Sun Life Medium Term Plan ICICI Prudential Gilt Fund Axis Strategic Bond Fund SBI Magnum Gilt Fund ICICI Prudential Medium Term Bond Fund SBI Magnum Medium Duration Fund Point 1 Bottom quartile AUM (₹2,732 Cr). Upper mid AUM (₹7,276 Cr). Bottom quartile AUM (₹1,942 Cr). Highest AUM (₹12,149 Cr). Lower mid AUM (₹5,701 Cr). Upper mid AUM (₹6,506 Cr). Point 2 Established history (16+ yrs). Oldest track record among peers (26 yrs). Established history (13+ yrs). Established history (24+ yrs). Established history (20+ yrs). Established history (21+ yrs). Point 3 Top rated. Rating: 4★ (upper mid). Rating: 4★ (upper mid). Rating: 4★ (lower mid). Rating: 2★ (bottom quartile). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderate. Point 5 1Y return: 13.17% (top quartile). 1Y return: 8.00% (bottom quartile). 1Y return: 8.88% (upper mid). 1Y return: 6.10% (bottom quartile). 1Y return: 8.87% (upper mid). 1Y return: 8.11% (lower mid). Point 6 1M return: 0.36% (top quartile). 1M return: -0.49% (bottom quartile). 1M return: 0.22% (upper mid). 1M return: -0.70% (bottom quartile). 1M return: 0.31% (upper mid). 1M return: 0.07% (lower mid). Point 7 Sharpe: 3.02 (top quartile). Sharpe: 1.34 (bottom quartile). Sharpe: 2.09 (upper mid). Sharpe: 0.35 (bottom quartile). Sharpe: 2.48 (upper mid). Sharpe: 1.57 (lower mid). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Point 9 Yield to maturity (debt): 7.52% (upper mid). Yield to maturity (debt): 6.39% (bottom quartile). Yield to maturity (debt): 7.66% (upper mid). Yield to maturity (debt): 6.47% (bottom quartile). Yield to maturity (debt): 7.69% (top quartile). Yield to maturity (debt): 7.23% (lower mid). Point 10 Modified duration: 3.63 yrs (lower mid). Modified duration: 3.25 yrs (upper mid). Modified duration: 3.22 yrs (upper mid). Modified duration: 6.68 yrs (bottom quartile). Modified duration: 2.91 yrs (top quartile). Modified duration: 3.78 yrs (bottom quartile). Aditya Birla Sun Life Medium Term Plan
ICICI Prudential Gilt Fund
Axis Strategic Bond Fund
SBI Magnum Gilt Fund
ICICI Prudential Medium Term Bond Fund
SBI Magnum Medium Duration Fund
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2024 (%) Sub Cat. Motilal Oswal Midcap 30 Fund Growth ₹101.72
↑ 0.52 ₹33,053 2.8 11 3.9 28.1 33.9 57.1 Mid Cap Nippon India Small Cap Fund Growth ₹165.343
↓ -0.59 ₹66,602 3.1 13.3 -3.2 23.9 33.6 26.1 Small Cap HDFC Small Cap Fund Growth ₹138.713
↓ -0.83 ₹35,781 7.1 16.3 3.1 23.9 31 20.4 Small Cap Franklin India Smaller Companies Fund Growth ₹165.647
↓ -0.65 ₹13,995 -0.1 10.4 -6.9 22.8 30.6 23.2 Small Cap Nippon India Multi Cap Fund Growth ₹297.191
↓ -0.94 ₹45,366 4.7 15.8 4 23.4 29.9 25.8 Multi Cap HDFC Mid-Cap Opportunities Fund Growth ₹191.171
↓ 0.00 ₹84,061 3.8 13.9 5.1 25.8 29.6 28.6 Mid Cap Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Aug 25 Research Highlights & Commentary of 6 Funds showcased
Commentary Motilal Oswal Midcap 30 Fund Nippon India Small Cap Fund HDFC Small Cap Fund Franklin India Smaller Companies Fund Nippon India Multi Cap Fund HDFC Mid-Cap Opportunities Fund Point 1 Bottom quartile AUM (₹33,053 Cr). Upper mid AUM (₹66,602 Cr). Lower mid AUM (₹35,781 Cr). Bottom quartile AUM (₹13,995 Cr). Upper mid AUM (₹45,366 Cr). Highest AUM (₹84,061 Cr). Point 2 Established history (11+ yrs). Established history (14+ yrs). Established history (17+ yrs). Established history (19+ yrs). Oldest track record among peers (20 yrs). Established history (18+ yrs). Point 3 Rating: 3★ (lower mid). Top rated. Rating: 4★ (upper mid). Rating: 4★ (upper mid). Rating: 2★ (bottom quartile). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Point 5 5Y return: 33.92% (top quartile). 5Y return: 33.57% (upper mid). 5Y return: 31.02% (upper mid). 5Y return: 30.63% (lower mid). 5Y return: 29.92% (bottom quartile). 5Y return: 29.62% (bottom quartile). Point 6 3Y return: 28.09% (top quartile). 3Y return: 23.86% (lower mid). 3Y return: 23.90% (upper mid). 3Y return: 22.78% (bottom quartile). 3Y return: 23.38% (bottom quartile). 3Y return: 25.76% (upper mid). Point 7 1Y return: 3.93% (upper mid). 1Y return: -3.18% (bottom quartile). 1Y return: 3.14% (lower mid). 1Y return: -6.92% (bottom quartile). 1Y return: 4.02% (upper mid). 1Y return: 5.08% (top quartile). Point 8 Alpha: 3.89 (top quartile). Alpha: -2.86 (bottom quartile). Alpha: 0.00 (lower mid). Alpha: -7.46 (bottom quartile). Alpha: 0.04 (upper mid). Alpha: 3.00 (upper mid). Point 9 Sharpe: 0.23 (upper mid). Sharpe: -0.10 (bottom quartile). Sharpe: 0.07 (upper mid). Sharpe: -0.33 (bottom quartile). Sharpe: 0.03 (lower mid). Sharpe: 0.23 (top quartile). Point 10 Information ratio: 0.44 (upper mid). Information ratio: -0.10 (bottom quartile). Information ratio: 0.00 (lower mid). Information ratio: -0.13 (bottom quartile). Information ratio: 0.97 (top quartile). Information ratio: 0.62 (upper mid). Motilal Oswal Midcap 30 Fund
Nippon India Small Cap Fund
HDFC Small Cap Fund
Franklin India Smaller Companies Fund
Nippon India Multi Cap Fund
HDFC Mid-Cap Opportunities Fund
Risk profiling gives you the clear picture of all the risk and returns expectations from an investment. It helps you create a focused strategy to invest in a manner that will help you reach your financial goals. Your financial advisor is expected to give you all the necessary information regarding risk assessment and help you carry out the same. Securities and Exchange Board of India (SEBI) and The Association of Mutual Funds of India (AMFI) both have stated the guidelines and norms for carrying out a detailed risk assessment of the investor and then suggest them the appropriate schemes. Such approach helps in reducing the losses that might occur if an investor invests in a scheme that is out of their risk appetite.
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