How to understand a fund factsheet

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An investment fund factsheet might not be your first choice of bedtime reading(!), but it can give you really useful information about an investment fund. But what exactly is a fund factsheet and what does a fund factsheet tell you?

How to understand a fund factsheet

The first thing it’s important to know is that a fund factsheet is produced by the asset management company (the business that’s managing the funds). It’s not an independent assessment of the fund. The way a fund factsheet is set out may vary from one provider to another, but they will all will include the same basic information.

A fund factsheet will tell you:

  • The name of the fund, for example, Equity Growth Fund.
  • The name of the company that’s managing the fund, for example, ABC Investments.
  • When the fund factsheet was produced and the period it relates to. Fund factsheets are produced monthly but there may be a bit of a lag between the end of the month it relates to and the date it’s published.
  • The objectives of the fund. This will tell you whether the fund is designed to produce an income or to increase its value (growth). It will also tell you in very broad terms what it is going to invest in (e.g. shares, bonds etc) and whether it invests in companies in a certain location and/or of a certain size.
  • Who the fund manager is. It will give you the name of the fund manager or managers. These are the people who are responsible for deciding how money in that fund is invested. It may also tell you when the fund manager took over the management of that fund.
  • Launch date: namely, when the fund was launched.
  • The fund size: this will be a figure in £ rather than the number of people who’ve invested in it.
  • Fund or unit price: this is the price of a unit in the fund. It may also tell you how much a unit cost when the fund was launched, but not all companies do this.
  • IA sector or sector: you may see something like ‘UK All Companies’ or ‘Europe including UK’. IA Sector stands for the Investment Association Sector and the Investment Association is the trade body for investment companies and funds. There are thousands of different investment funds and the IA sectors are a way of dividing these funds into groups. You can see a list of the sector definitions on the Investment Association website.
  • Number of holdings: this is the number of different companies that the fund invests in. It could be a couple of dozen companies, for a fund that’s very focused (and probably quite risky!), or it could be over 100.
  • Asset allocation: there may be a pie chart or a table showing what the fund is invested in – for example – shares, property, bonds etc. It may give more detail than this, such as ‘financial companies, insurance companies, retail sector etc’. This will vary from one company to another.
  • Top ten holdings: this is a list of the companies that the fund currently has the most money invested in. It will also tell you the percentage of the fund invested in each company.
  • Charges: the fund factsheet should tell give you information about the charges but it’s unlikely to give you the full figure.

SAVVY TIP: The factsheet may include information on the initial charge, if there is one. This is an upfront charge which can be up to 5%, although many funds don’t have them any longer. The factsheet may also tell you what the annual management charge is (AMC) or the ongoing charges figure (OCF). The ongoing charges figure is more helpful because it gives you a fuller picture of the charges you’ll actually pay, although it doesn’t include every single charge.

  • Performance: the factsheet will normally have information on performance over the last year, three years and five years (or less, if it’s a newer fund). It will also include how the sector it’s part of has performed as a whole (this refers to funds in the Investment Associations sector list that I mentioned earlier). The idea is that you can see whether the fund has done better or worse than average compared to similar funds.
  • Minimal initial investment: this tells you how much you can invest in the fund as a one-off initial investment and on an ongoing basis.
  • Fund ratings and awards: fund providers are no shrinking violets so if the fund has won any awards they may shout about it on the fund factsheet page.

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What are the different share classes in funds?

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