When choosing a mutual fund, you will have the option of selecting the risk factor | ABP Paisa Live

Soon, SEBI might provide the Risk Adjustant Return, or RAR, for each program in addition to the actual returns. Experts predict that investors will find it simpler to make decisions as a result. Information Ratio will be used to determine RAR. For which it will be required to reveal both the returns relative to the benchmark and the RAR.

The profit or potential profit from an investment that takes into account the level of risk required to realize it is called a risk-adjusted return. The risk is evaluated against an investment that is essentially risk-free, often US Treasuries.

The risk calculation is expressed as a number or a rating, depending on the methodology. All portfolios, investment funds, and individual stocks are subject to risk-adjusted returns.