What is a fact sheet?

A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.

Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.

The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.

What is a fact sheet?

An information sheet is the most reliable guide an investor can access to get detailed information about a scheme at once. Have you seen what a student’s monthly report card looks like? It covers not only aspects related to the child’s academic performance, but the child’s behavior, participation in extra-curricular activities, attendance, discipline and everything about the child that you need to know. The report card also shows the child’s performance compared to the class average.

The same applies to a fund factsheet. It covers important aspects of the fund that every potential or existing investor needs to know such as the investment objective, benchmark, AUM, fund managers, features such as available options, minimum investment amount, applicable exit loads and NAVs of different plans. The fact sheet therefore covers important performance and risk parameters such as standard deviation (measure of volatility), beta, Sharpe report, expense ratio of different plans and portfolio turnover for equity funds, while the duration, average maturity and return of the portfolio are indicated for debt funds.

The factsheet also shows portfolio holdings for the previous month across all sectors and securities. It shows the historical performance of the fund relative to its benchmark and specifies the level of risk of the fund. In short, the fact sheet provides you with every critical piece of information you need to know as an investor.

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