mutual fund factsheet

Year ago, when I started out as a newbie investor, I called up my friend who was working with one of the largest and most respected mutual funds in town then. Of course, he knew a thing or two about mutual funds.

“Tell me which fund to invest in. I want to do some tax saving.”

He told me 1 ELSS or tax saving fund and I invested. That was the beginning of my relationship with mutual funds.

I didn’t care to understand any further about my prospective investment. A trusted friend had recommended them, that was enough. Why would I bother?

For a couple of years, I continued to rely on his advice until, I myself started to work with a financial advisory company.

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If you have ever read or heard a mutual fund advertisement in print or radio or TV, the final cautionary words are – “Please read the scheme information document carefully before investing.” 

In reality, very few investors actually do it. That does not take away the fact that the best way to understand a fund is to read various documents associated with it.

Unfortunately, the fund industry has done its best to confuse the investor in every way possible. The information is strewn across so many documents including a Scheme Information Document (SID), a Key Information Memorandum (KIM) and a Factsheet.

And worse, there is no standard format for them. So, if you take scheme documents of two funds, you would feel that they have come from two different planets.

Just search documents for any two funds on the Internet and you will know what I mean.

As an investor, the most important information that you should be looking for is available in the fund factsheet.

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