Key Points:
- A fund factsheet is a super useful tool when you're researching a fund you're interested in.
- It contains important information like investment strategy, fund size, historical performance, fees, and more.
- Even though it might seem complicated for beginners, think of it like reading a movie poster. Let’s break down how to read a fund factsheet from this perspective!
Want to understand better and invest with more confidence?
Before diving deeper into the fund factsheet, let's first discuss what a fund and a fund factsheet are.
What is a Fund?
A fund is like a big container where money from many investors is pooled together and invested in various financial instruments like stocks, bonds, or other assets. So, if you don't want to bother picking stocks or bonds one by one, you can put your money into a fund, and the fund manager will take care of your investment. The goal, of course, is to make your money grow faster and safer.
What is a Fund Factsheet?
A fund factsheet is a brief information sheet that summarizes the fund. Here, you can find important details like the investment strategy used, the size of the fund, historical performance, fees, and more. If you think about it, it's like a movie poster that gives you an overview of the story and the actors involved. A fund factsheet does the same, providing a quick snapshot of the fund you’re interested in.
So, if you're considering investing in a fund, the fund factsheet can be a practical and quick source of information to help you understand it better before making a decision.
How to Read a Fund Factsheet
Although the format can vary, most fund factsheets will include key information such as:
- Fund name and share class
- Investment strategy or objectives
- Important details like fund size, launch date, benchmark, and International Securities Identification Number (ISIN)
- Historical performance
- Portfolio overview, which shows what the fund invests in
- Fees and expenses
- Fund Name vs. Movie Title
Movie buffs can usually guess a lot about a film from its title, and it’s the same with a fund’s name. For example, from the fund name ‘Yellow Pebble U.S. Technology Equity Fund – IDR-ACC’, we can tell:
- This fund is managed by Yellow Pebble
- It invests in technology companies in the U.S. market
- Its main asset class is equity
- The fund can be purchased in IDR besides the base currency
- ACC means dividends are accumulated and reinvested into the fund
- Fund Description vs. Movie Synopsis
Just like you use a movie synopsis to understand the plot, you can use the fund description to grasp its strategy. Geographic descriptions like ‘Asia’, ‘Europe’, or emerging markets indicate where the fund will be invested. Terms like ‘growth’, ‘alpha’, ‘quality’, ‘income’, and ‘dividend’ indicate the investment style. Don’t be misled—‘dividend’ or ‘income’ doesn’t necessarily mean the fund will pay out dividends. Any fund can pay dividends, depending on the fund manager.
- Main Asset Class vs. Lead Actor
The lead actors in a movie often attract viewers, and the main asset class in a fund might be what draws you to invest. When you look at a fund factsheet, you can quickly identify key assets. Usually, these include equities, bonds, and commodities, while balanced funds hold a mix of these assets.
Also, take note of the total fund size, which is the total value of all the assets in the fund. Think of it like the popularity and salary of the lead actor. The bigger the fund, the more people trust the fund manager who runs it. But, a large fund size doesn’t always mean it’s better. Even with a successful track record, managing a larger fund can sometimes reduce overall performance. The fund manager might need to invest in lower-yield, more common assets to effectively manage all the money.
- Fund Performance vs. Movie Reviews and Awards
Great movies often win awards at festivals and receive praise from critics. In a fund factsheet, the fund’s track record is displayed through performance charts. Check the annual return or average return over several periods (like 3 or 5 years) to see how well the fund has performed. A 5-year period is considered long enough to capture the fund’s performance across different economic conditions, giving you a sense of how well the strategy holds up in various markets.
Another key metric often used to assess fund performance is the benchmark index. For example, if your fund is measured against the Straits Times Index, and STI rises 3.76% in a year, your fund should match or exceed that benchmark’s performance.
- Fund Launch Date vs. Movie Release Date
Just like a movie’s release date tells you when it premiered, a fund’s launch date tells you when it started. While most moviegoers want to see the latest releases, it’s usually the opposite for funds. Most investors prefer funds that have been around for at least 5-10 years because they’re considered more established. But, remember that past performance doesn’t always predict future results.
Find Your Next "Blockbuster" Fund!
A fund factsheet is a super useful tool when researching a fund you’re interested in. Use it wisely to compare various funds so you can decide which one best fits your portfolio or risk profile.
Ready to Start?
With digibank by DBS, you can access macroeconomic forecasts and investment recommendations from our experts, plus over 150+ investment products ranging from UT to Bonds to help navigate your future. Investing becomes more strategic and seamless, even amid interest rate fluctuations.
Contact us now!
