Check these 6 points in a mutual fund fact sheet before you invest


A fact sheet provides comprehensive information about a mutual fund which will help you decide whether you want to invest in it. It has key information right from the historical data and performance of the fund to details about the experience of the fund manager. Even though this data is readily available, a lot of investors look past it either because they don’t know how important this information is or because they don’t know what to exactly look for in a fact sheet.

Let’s take a look at the six important bits of information that you should check and understand in a fact sheet before you make a mutual fund investment in India.

  1. Past performance

The past performance of a mutual fund may not indicate how it will perform in the future. But looking at that information can give you an idea about the fundamentals of the mutual fund. You can check and understand how the fund has performed during the difficult economic periods and compare its past performance with the performance of other mutual funds of your choice. Analysing the past performance of a mutual fund will also help you understand how the fund has adjusted its portfolio in the past to stay relevant to the theme of the fund.

  1. Fund manager’s experience and performance history

As an investor, you have every right to enquire about the experience of the person who will be managing your hard-earned money. That’s exactly why you should check out information about your fund manager from the mutual fund fact sheet. You can look at how the fund manager has handled the funds during difficult economic situations.

  1. Investment objective of the mutual fund

Every mutual fund has its own objective and it’s important that you understand that and make sure that the fund’s objective matches your financial goals. For example, if you are looking for capital appreciation in the long term and if your fund’s objective is not aligned with that, it will not suit your investment goals at the end of the day.

  1. Portfolio and its composition 

Profits from your mutual fund investments are dependent on the performance of the fund’s portfolio. Hence, analysing the portfolio composition of a fund is important. You could take a look at how the top contributors of the fund have been performing in the past and see how the composition has changed over time to adjust to the changing market conditions.

  1. Expenses related to the fund

You could take a look at the expenses related to the fund. The expense ratio is a percentage of your total investment value which is charged as a fee by the fund house. This information will also be available in the fact sheet. You should also take a look at the components of the expense ratio to better understand where the money charged to you goes.

  1. Risk parameters 

Just like with investment objectives, your risk appetite should also match how the fund manager manages the risk. This can be understood by looking at the following ratios that will be available in the fact sheet:

  • Beta: This ratio shows the sensitivity of the fund towards market volatility in comparison to its benchmark index.
  • Sharpe ratio: This ratio indicates returns generated over risk-free returns for every unit of risk taken by the fund.
  • Standard deviation: This ratio measures the volatility of the scheme.

A fact sheet is a one-stop shop looking at all the material facts about a specific mutual fund scheme in India. It is a good place to start your mutual fund investment research and its components serve as helpful comparison parameters between different funds. Once you have narrowed down on the fund you want to invest in, you can easily subscribe to that MF online within minutes through a trusted broker’s website or app.