A Key Investor Information Document (KIID) alongside a Fund Factsheet are two important materials when deciding to buy a fund. They are key to knowing what you are investing in.
What is a KIID?
KIID Stands for Key Investor Information Document. Each fund will have one. When buying a fund, you should be asked if you have read the KIID and there’s a good reason for doing so .
There are similarities between a Fund Factsheet and a KIID in that they are providing details on a specific fund. There is arguably more value in the Fund Factsheet, but the KIID, while it says less, it says a few key things that you should acknowledge.
The Overlap with a Fund Factsheet
You will notice some overlap in terms of the information on a KIID and Fund Factsheet – such as the objective, a focus on growth on income, performance data and highlighting of the selected benchmark to assess performance against.
So it all looks very similar on first glance. But there are differences to be aware of and you should ensure you read the KIID fully before buying.
Key Benefit: Understanding the Risk Appetite of the Fund
The key reason to view the KIID is to understand the grading of the risk profile. A KIID will contain a grading from 1 through to 7 (low to high risk). This risk rating is calculated on the volatility of the fund – measured by the volatility of its returns over the past 5 years.
So if you’re looking for a nice stable income, something with a 6 or 7 is something to be cautious of!
The Charge from the Fund Manager
Contained within the KIID is also confirmation of the charge levied by the fund manager as a % – such as 0.5%. This is the ‘reward’ the fund manager takes for managing and overseeing the fund. When you purchase a fund through your Online Platform, you will note this charge in addition to the administration charges levied by your Platform of choice.
The Fine Print
Additional details included are on the structure of the fund itself. These will probably be of less interest to you.