The fund’s investments
A mutual fund is a collection of investments, such as stocks, bonds and other funds. Your Fund Facts document provides you with a quick overview of the fund’s top investments, as well as the mix of the overall investment portfolio.
Looking over a Fund Facts document, you’ll be able to quickly find out what the fund’s 10 largest investments were as of the date that the document was produced, as well as the percentage of the net asset value that each of the top 10 investments represents. Fund Facts also provides you with the total number of investments in the fund, giving you a sense of how diversified the fund’s investments are. Learn more about how diversification works.
The investment mix section of a Fund Facts document provides a breakdown of the fund’s investment portfolio. This mix may express the fund’s investment mix by the industries that it invests in, its asset classes, the geographic locations of its investments, or other measures that can give you a better idea of the fund’s investment exposure.
Risk rating
All investing involves some amount of risk. Generally, the higher the risk of an investment, the higher the potential return, though there is no guarantee that you will actually get a higher return by accepting more risk. One way to gauge a fund’s risk is by looking at how much its returns have changed over time. This is what’s known as the fund’s “volatility,” and Fund Facts use volatility to communicate a fund’s risk rating.
Volatility is calculated using a method that’s based on standard deviation, which considers how much a fund’s annual returns have deviated from the expected normal returns. Funds with returns that have varied greatly from the average will have a larger standard deviation, and will be more volatile, while more stable funds will have deviations that are lower.
Once a fund’s volatility has been measured, it is categorized into one of five potential risk categories for your Fund Facts document: Low, Low to Medium, Medium, Medium to High and High. This is determined by the fund’s manager and gives you an indication of how volatile a fund has been in the past.
Volatility is one way that that risk can be measured, but does not capture other factors that can affect how suitable a fund may be for your investment portfolio. Other factors may include how much a fund lost during a period of market decline or how long it took the fund to recover. It’s also important to remember that while historic volatility of a fund can provide insight into how it has behaved in the past, it cannot predict how it will behave in the future.
While the Fund Facts risk rating tells you about the fund’s overall volatility, it’s not necessarily an indication about how suitable the fund is for you. Depending on your risk tolerance, investment objectives and time horizon, you may need to hold a range of products with varying risk ratings in order to achieve your financial goals. Learn more about why risk matters.
Past performance
The past performance section of your Fund Facts document shows you how the fund has performed over the long term. You’ll see the fund’s year-by-year returns for the last 10 years or, if it hasn’t been around that long, its performance from the date it was created and began reporting.
This information will let you know how often the fund dropped in value over the past 10 years (or less, depending on how old the fund is) and the change in its value over that period, which you can use to help assess how risky the fund has been in the past. These returns are the net returns, after the fund’s expenses have been deducted.
You’ll also be able to see the fund’s best and worst returns in a three-month period. While future three-month returns could be higher or lower, laying out the fund’s past highs and lows can give you a sense of how much your investment could change in a short period of time.
Sales charges and fund expenses
Sales charges and fund expenses reduce a fund’s returns, and sales charges can affect how much it costs you to buy or sell fund units. Using the Fund Facts document, you’ll be able to find important information about charges and expenses like the fund’s management expense ratio (including trailing commissions) and trading expense rating, as well as other fees.
The management expense ratio, or MER, is a combination of a fund’s management fee and its operating expenses. It’s paid by the fund and is expressed as an annual percentage of the total value of the fund. The trading expense ratio, or TER, is a measure of the fund’s trading costs, giving you an idea of how much it cost the fund to buy and sell its investments.
MERs include any trailing commissions that are paid by the fund to your advisor’s firm for as long as you hold the fund. While not every fund pays trailing commissions, most funds that are sold outside of fee-based accounts or discount brokerage accounts do. Learn more about trailing commissions and other fund fees.
Other important information
Your Fund Facts document also contains “quick facts” about the fund’s value as of a particular date, the fund manager, the required minimum investment, and other relevant details. You’ll also find information about how to contact the fund manager and how you may be affected by taxes.
FAQs
The fund facts document is a clear, plain language document that contains key information about the mutual fund you're thinking about purchasing. In no more than two double-sided pages, it explains the basics of what the fund invests in, the risks involved, how the fund has performed, and the costs of ownership.
Where can I get a fund fact sheet? ›
Mutual fund fact sheets are updated monthly and are usually available on the fund house's website or through other online platforms.
How to read a fact sheet of a mutual fund? ›
The qualitative and quantitative data in factsheets can sometimes be overwhelming, so here are some key terms to look out for.
- Investment objective and methodology. ...
- Fund manager details. ...
- Fund type. ...
- Performance details. ...
- Fee details.
This includes the basic information on the background of the fund, including the date the fund started, its total value at the time the Fund Facts was produced, the fund's management expense ratio (MER), the name of the fund manager and portfolio managers, the fund's distributions and the minimum investment needed to ...
What is the difference between fund facts and prospectus? ›
While the Fact Sheet provides recent performance data, the Prospectus often includes a more extensive history of the fund's performance, allowing you to see how it has performed over various market conditions.
How to read an ETF fact sheet? ›
The top tips for reading an ETF fact sheet include:
- Identify the ETF's ticker symbol.
- Examine the ETF's investment objective.
- Analyze the ETF's performance history.
- Check the ETF's expense ratio.
- Evaluate the ETF's holdings.
- Analyze the ETF's risk metrics.
Performance data: Fact sheets present the fund's historical performance over various time frames, from a month to 10 years or more. This data is often compared against a relevant benchmark index to show investors how well the fund is doing relative to its part of the market or its peers.
Where can I find fund facts? ›
You can consult the Fund Facts on the website of the institution offering the fund, or simply ask for a copy. The Fund Facts provides core information about the fund and briefly explains the fees and expenses you will pay, the dealer's compensation, and your rights.
How do you demonstrate proof of funds? ›
Proof of funds refers to a document that demonstrates the ability of an individual or entity to pay for a specific transaction. A bank statement, security statement, or custody statement usually qualify as proof of funds. Proof of funds is typically required for a large transaction, such as the purchase of a house.
How to interpret a fact sheet? ›
The fact sheet typically begins with the fund's stated objective and strategy. Investors should carefully review this section to understand the fund's purpose and how it aims to achieve its goals.
In a nutshell, it explains how the portfolio is managed and its risk profile. It also includes the date of the fund fact sheet, the objectives of the portfolio, the investment management company, and the names of the fund managers. The next section provides a summary of the portfolio information.
What is the fact sheet of a fund? ›
A fund factsheet is an overview of a fund including the fund's investment objective, risk level, costs, past performance and holdings details. Factsheets are usually published on a monthly basis and available online for free, and are thus one of the most convenient and timely tools for investors to learn about a fund.
Which of these details is given in a fund fact sheet? ›
A mutual fund fact sheet usually contains scheme details like name, objective, manager info, launch date, assets under management, net asset value, loads, benchmark index, and expense ratio. It also includes portfolio holdings and quantitative measures like standard deviation and Sharpe ratio.
How often are fund facts updated? ›
“Fund Facts must be renewed on an annual basis and must be updated in the event of a material change that affects the content of the Fund Facts (e.g., a change in investment objectives, an increase in the management fee),” an OSC spokesperson told Advisor.ca by email.
What is a fund fact sheet and kiid? ›
A KIID is the older version of a KID. It was designed to replace a fund's simplified prospectus, so that non-expert investors could get the information they need in a short, standardised format. KIIDs are two pages long and made up of six sections, covering: Fund, share class and management company details.
What is the purpose of the fund facts? ›
Using the Fund Facts document, you'll be able to find important information about charges and expenses like the fund's management expense ratio (including trailing commissions) and trading expense rating, as well as other fees. The management expense ratio, or MER, is a combination of a fund's management fee.
What is disclosed in fund facts? ›
If you're considering a mutual fund, the seller is required to provide Fund Facts, an information sheet on the fund that discloses critical information such as the total number of investments in the fund, the fund's performance history, and costs.
Is a fund fact sheet published by mutual funds? ›
A Track your MF Investments using Fund Fact Sheet.. is a basic one-page document that gives an overview of a mutual fund scheme with special emphasis on disclosure of scheme performance and portfolio and is published every month by each mutual fund. It is like a report card that indicates the health of the scheme.
How do you explain funding? ›
Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company.
How do you explain the source of a fund? ›
Source of funds refers to the origin of funds used in a transaction. It relates to the account that was used to make a payment and the source of the money in that account.
A fund factsheet is an overview of a fund including the fund's investment objective, risk level, costs, past performance and holdings details.
