Funds Guides

Understanding a Fund Fact Sheet

Reading and understanding a Fund Fact Sheet is an important activity in knowing exactly what you are investing in. A Fund Fact Sheet should serve as the very basis for starting to make an investment decision.

What is a Fund Fact Sheet?

A Fund Fact Sheet is similar to the packaging of food items in a supermarket. It will tell you the ingredients of the fund (the companies or assets it has invested in and the percentages), the brand (fund manager) and it’s nutritional value (performance).

These Fund Fact Sheets can be found on the websites of the fund manager, third party websites and online fund supermarkets or online brokers.

Not only is it an important resource when considering what fund to buy, it also in getting an update on existing funds you may hold – it is dynamic!

So What does a Fund Factsheet Contain?

A Fund Fact Sheet is usually in the region of two pages. It contains a variety of information but here are some of the most useful things to look out for

Fund Manager, Objective & Commentary

You will note the name of the fund manager which is important to understand their reputation as you do your homework. Likewise, you will find details of the fund’s objective – where it seeks to invest.

The fact sheet will also tend to include recent commentary from the fund manager who will reflect on performance. This is why it’s important to keep a check on Fund Fact Sheets beyond your initial performance.

The Financials – Size, Yields & Dividends

It will also contain some key objective financial information in the way of the size of the fund. A large fund in the region of Billions of Pounds (Assets under Management) suggests it is a popular one, however these may not be as agile as smaller funds when it comes to changing allocations should the need arise.

Also contained may be when dividends are paid (if there is a dividend paid by the fund) as well as a yield based in percentage – reflected over a historical 12 month period. Particularly relevant if you have opted for the ‘income’ version of a fund, rather than ‘accumulation’.

You should also be able to see how much cash is within the fund, if the amount is beyond a few percent, some interpret this as a sign that the fund manager isn’t overly optimistic about the stock markets.

Crucially, What’s in It? Fund Manager’s Top 10

Perhaps the most crucial bit of information – you will find information on what the fund is invested in. Typically, the top 10 holdings (or the biggest by size) will be detailed. Whilst the fund likely invests in more than 10 shares or assets – the top 10 is likely where the bulk of investor’s money is.

Not only what’s in it will be displayed, but information on where the holdings are will be displayed. This could be in the form of sectors such as ‘Consumer Staples’ as well as by Country of Listing (such as Japan, UK or USA). The latter particularly relevant for Global Funds.

Performance!

And of course, the Fund Fact Sheet will show you how the fund has performed over various periods of time. It will also tend show you two lines – denoting the performance of the fund itself and against a stock market index such as the FTSE or the average performance of comparable funds within its sector (as defined by The Investment Association).

Past performance is no guarantee to future success – but it can be a consideration.

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