DIY Investor Magazine
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June 2017
40
FOCUS ON FUNDS: THE FACTSHEET
The key document that allows investors to understand a
fund’s objectives, major holdings, investment strategy,
costs, historical performance and suggest its future
prospects is its fact sheet.
Fact sheets are available on issuers’ websites, they
can be found on fund supermarkets and investment
platforms and the DIY investor could do well to spend
some time getting to grips with these important
documents so that they are able to objectively
research and compare and contrast funds they may be
considering.
The Key Investor Information Document (KIID) replaced
the Simplified Prospectus as part of the EU UCITs IV
directive in 2011 and was designed to be a simplified
and engaging document to enable the retail investor to
assess funds in a standardised format.
It is a requirement of the directive that KIIDs are updated
as often as is required to maintain their accuracy and
any material changes regarding investment strategy and
charges has to be updated as soon as is reasonably
practicable; it is therefore advisably to periodically
review fact sheets for the products you hold.
The fact sheet will include the name of the portfolio
manager and a description of the fund’s objective –
capital growth, income or a combination of the two; it
will also show where the fund invests in terms of industry
sector, asset types and geography.
Sometimes the fact sheet will include market
commentary from the manager, including updates
on influences and events in the fund’s space or key
investments that the fund has made; DIY Investor
includes a large number of articles and videos in which
fund managers set out their stall.
A key consideration for a would-be investor is whether
the fund looks to deliver capital growth or income; this
should indicate a fund that addresses your particular
requirement and which of its share classes you may
consider.
Funds that aim for capital growth tend to invest in
companies that do not pay dividends, whereas funds
that are looking to deliver income invest in more mature
businesses that are a more reliable source of dividend
income.
The fact sheet will usually show the top ten holdings in
the fund and the percentage of the overall fund they
represent and therefore how much the success or
otherwise of the funds depends upon them.
Holdings in the funds are broken down by geography,
asset type and industry sector which aid comparison,
particularly of global funds; it also declares the
proportion of the fund that is held in cash – a large
proportion may indicate a lack of certainty in the
strategy of the fund or concerns about the sphere in
which it operates.
A fact sheet will also show historical performance
data, usually over one, three and five years and this is
delivered as a ‘total return’ figure – the return you would
have received assuming you reinvested any income
back into the fund.
The fund’s annual performance is also presented in
comparison with other unit trusts and OEICs in its
particular sector and each is ranked by industry body
the Investment Association; historical data will show
how this ranking has changed over time – whilst past
performance may be no guarantee of future returns, it
can be useful to know if the fund you are considering is
on the wax or the wane.
In additional to its fact sheet, investment trusts issue
regular, sometimes daily, updates as to the price of its
shares in comparison to its net asset values (NAV) –
the combined market value of its investments – which
can allow a would be investor to identify trusts that are
‘cheap’.
WHILST PAST PERFORMANCE MAY BE NO GUARANTEE
OF FUTURE RETURNS, IT CAN BE USEFUL TO KNOW IF
THE FUND YOU ARE CONSIDERING IS ON THE WAX OR
THE WANE
