What You Need To Look For In Your Mutual Fund’s Fact Sheet

• Mutual fund fact sheets contain information about the schemes
• Fact sheets provide all the information at one place
• Such information can aid research-based decision-making
• It is important to know about the fund you are investing in

All fund houses come with mutual fund (MF) fact sheets every month. The fact sheet, which is readily available on the websites of the asset management companies (AMCs), contains vital information for investors. It contains a plethora of information, right from the market outlook, scheme performance comparison with the benchmark, expenses, portfolio composition and others.

Considering the dynamic nature of the markets and loads of information available in the public domain these days, it is easy to get lost down a rabbit hole of information, especially for new investors. That’s where MF fact sheets can show the way. The details available in the fact sheets can help potential and existing investors make informed investment decisions.

Here are some key aspects that investors should look for when going through the fact sheets of MFs

Market overview and outlook

This is one aspect that most investors either ignore or form an opinion about on the basis of the market noise. Both these situations are neither good for you nor your investment. Investing is a long journey, and you need to shift gears in sync with the changing market conditions to be on the right track.

This segment of fact sheet contains information about the key factors such as government policy, inflation, GDP, or other external factors that the fund house thinks has affected or will affect the future market movements. This expert view can aid your decision-making process.

Investment objective

This provides you crisp information about the scheme’s objective and the investment philosophy. Knowing the objective can help you evaluate the scheme’s compatibility with your financial goals. For instance, a large-cap equity fund will, typically, aim for growth by investing in large-cap companies. Thus, it is best suited for long-term goals such as retirement or your children’s higher education needs. Similarly, a multi-cap fund will help you invest in companies across all market caps in line with the prevailing conditions.

Portfolio composition

It gives information about the securities where the fund’s money or in MF language assets under management (AUM) is invested. This will give you the complete picture of your fund’s portfolio in terms of sector and stock selection if it is an equity fund. Similarly, for debt funds you will get to know credit ratings of debt securities which indicate its exposure to default risk and the average maturity in the portfolio (a higher duration bodes more volatility for debt funds).

Fund performance

Fund performance is the heart of investing because you invest to get better returns. The fund houses’ fact sheets provide information on the scheme performance schemes vis-a-vis their own benchmark, as well as broader market index such as CNX-Nifty or BSE-Sensex, in case of equity funds. It is important to compare the performance with the benchmark as that indicates how a particular category has done overall. A substantial difference between the fund’s and benchmark’s performance will need to be carefully evaluated. This will also help you evaluate the performance of your scheme during various time periods. Timely evaluation of fund will help you stay on course in your investment journey.

Fund manager information

The fact sheet also provides information about the fund manager who takes care of your money invested in a mutual fund. It has details such as the fund manager’s name, educational qualifications, experience and duration of management of the scheme, besides information on the other schemes he or she manages. It is believed that greater the time spent by the fund manager with a particular, the better are the chances of delivering returns.

The Bottom Line

You need not to be a market expert to stay informed about how your mutual funds are doing as long as you do your own research in an organized and informed manner. A mutual fund fact sheet comes in handy when you are looking to gather relevant information as it is displayed in easy-to-understand formats. Going through the fact sheet will definitely provide you peace of mind.