Are mutual fund colour code labels a true indicator of risk?
SEBI has initiated the system of colour coding/ product labeling for mutual fund schemes, wherein the mutual fund application forms, brochures and all advertisements in newspapers and magazines will have a product label of a specific colour to indicate the level of risk associated with the investment. This came into effect from 1 July 2013 and will help investors understand the risk profile of the fund before considering investing. The MFs have been divided in to three broad categories and assigned specific colours-
