Markets regulator Sebi has asked mutual funds to classify all debt schemes in terms of a potential risk class matrix, based on interest and credit risk.
For this purpose, a display table has been made mandatory from December 1, 2021, the Securities and Exchange Board of India (Sebi) said in a circular.
“It has been decided that all debt schemes also be classified in terms of a Potential Risk Class matrix consisting of parameters based on maximum interest rate risk (measured by Macaulay Duration (MD) of the scheme) and maximum credit risk (measured by Credit Risk Value (CRV) of the scheme),” Sebi said.
The decision has been taken based on the recommendation of the Mutual Fund Advisory Committee (MFAC) and discussions held with the mutual fund industry.
Sebi said asset management companies will have full flexibility to place single or multiple schemes in any cell of the Potential Risk Class matrix.