What is a mutual fund factsheet and why is it important for investors

While investing in a mutual fund, there are several things that an investor should know, like –

  • Where is the chosen mutual fund investing the money?
  • Which stocks or sectors were added after you invested in the fund?
  • Who is the fund manager of your mutual fund, and how did it perform in the past?

It is important to find answers to these questions before you invest in any mutual fund investment.

Components of a mutual fund factsheet

A mutual fund factsheet documents information, disclosures, data, and terms which an investor should be well informed about for the fund he desires to invest in. This is a three-page document thatsummarises the mutual fund you want to invest in.

Given below are some essential components of a mutual fund factsheet:

  • Fees – Before you invest in any fund, you need to know the fund’s fees and how much you will pay to the fund house. High fees could impact your goal of getting good returns.
  • Returns – Before you invest in any mutual fund, it is necessary to consider it from a profit point of view. A proper record of all the returns obtained by a mutual fund for the past few years is a great way to gain insight into how the fund has fared over a period.

  • Risk assessment – Depending on your financial standing and risk appetite, it is important to select a mutual fund that is in line with your financial goals. To estimate the risk attached to a fund, you must have a proper assessment of the performance of your chosen fund against the risk associated with it.

How to read mutual fund factsheets?

A mutual fund factsheet includes a lot of information that an investor should look at before investing. This information concerns the following features of a mutual fund:

  • Primary fund details: A fact sheet provides details of a mutual fund such as the scheme’s objective, category, plan options, Net Asset Value (NAV), and the minimum value that you will invest in the mutual fund. In addition, the level of risk associated with a particular fund is indicated by ‘riskometer’.
  • Fund managers: The fact sheet also includes details about the fund manager’s or fund management team’s qualification, experience, and performance details.
  • Portfolio: A mutual fund consists of a well-designed portfolio. Portfolio compositions are significant tools for the analysis of a mutual fund. You know where your money is invested through portfolio composition and what value is idle in cash.

Can a mutual fund factsheet help you?

Choosing the right mutual fund to invest in can be a daunting task, but a mutual fund factsheet can give an edge to you as an investor in understanding where your money is being invested. It can be a great place to start learning about investments and markets.

If you are planning to start your investment journey, it is prudent to reach out to a financial advisor and explore your options that are based on your investor profile and better suited for your goals.

Begin your investment journey today.