How to read Mutual Fund Fact Sheet 

Mutual fund fact sheets are the treasure house for the investors to get updated information about their mutual fund scheme. Most of the fund houses publish the fund fact sheets every month, and the investors can access these on the website of the mutual fund houses.

While the fund fact sheet shares a lot of relevant information for the investors, it is also essential for the investors to know the information they can generally expect from it. A fund fact sheet typically shares the following information:

1. Investment Objective – The fund fact sheet shares the investment objective of the mutual fund scheme, which will outline the broad investment principles for the mutual fund scheme. Knowing the investment objective of the mutual fund scheme assumes importance since such investments must match the investment objective of the investors as well.

2. Fund Manager – The fund manager is primarily responsible for the investment decisions for the mutual fund scheme. As such, the fund manager details along with their experience in the sector can help the investors stay reasonably assured about the performance of schemes. Also, the investors may also like to review the performance of the other mutual fund schemes managed by the same fund manager.

3. Fund Details – The fact sheet also shares the date of inception of the fund, NAV (Net Asset Value), Assets Under Management (AUM) as at the month end and even the average monthly AUM. Knowing the fund size also assumes importance in light of the recent guidelines, which restrict Total Expense Ratios for the mutual fund schemes.

4. Portfolio as at Month-end – The investors may get a sense of the portfolio composition of the mutual fund scheme through fund fact sheet, as the names of companies/ securities with significant portfolio share are disclosed along with their percentage. With such percentage available with them, the investors may get a sense of the concentration risk for a particular company/ sector within the portfolio.

5. Scheme Performance – In line with the SEBI Regulations, fund fact sheet discloses the scheme performance for the 1-year, 3-year, 5-year period and from the scheme inception date. Further, the performance of the benchmark index (Total Return Index) is also shared along with the scheme performance for ease of comparison by the investors. The scheme performance for the period longer than one year is disclosed in CAGR (Compounded Annual Growth Returns) terms.

6. Total Expense Ratio (TER) – The fact sheet also discloses the TER of the fund scheme, both for Direct Plan and Regular Plan and is published as a percentage of AUM.

7. Key Ratios – The fact sheet also discloses key ratios for the mutual fund scheme which may be relevant for the performance and fund review by the investors. For equity funds, generally Sharpe Ratio, Standard Deviation, portfolio beta, portfolio turnover ratio, Dividend Yield, etc. are disclosed. Similarly, for debt funds, usually duration, average maturity, Yield to Maturity (YTM), etc. are disclosed.  As such, the fund fact sheet provides a reliable source of information for comparing different mutual fund schemes.

8. Riskometer – As per SEBI guidelines, the level of risk is required to be classified under five categories: (i) low, (ii) moderately low, (iii) moderate, (iv) moderately high and (v) high. These risk associated with the mutual fund scheme are depicted through a pictorial meter known as ‘riskometer.’ With a graphic representation, it becomes easier for the investors to stay aware of the risk associated with investing in the specific mutual fund scheme.  

So, the next time you read a fund fact sheet, you may absorb the rich information in a much better manner for making an informed investment decision.