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Understanding Mutual Fund Factsheet

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Mutual funds are good investment options.

Unlike direct equity investments like equity shares, mutual funds are managed by experts who know what to buy, when to buy and at what price to buy.

They make timely decisions and strive to bring in good returns for the investors.

The first topic for today is:

  • 1. Understanding Mutual Fund Fact Sheet and Portfolio*

If you visit any Mutual fund website, there will be two important statutory documents that are put on the MF website:

1. Fact sheets

2. Portfolio disclosure

These two documents are important sources of information for investors like us.

They are useful tools for both new investors and those who are already invested in a mutual fund.

SEBI and AMFI mandates it that mutual fund houses shall provide this information every month on their websites.

So, we can download these documents from the mf website everyone and get insights about the fund.

First, lets understand from where to download these files.

I will give you an example.

Assume i am an investor of DSP Blackrock Mutual Fund. The official website of DSPBR is

If I go to the website, i will have sections called *Investor Center*.

Under that there will be a section called *Downloads Center*

Under that select *Forms and Information Documents*

Select *Information Documents* and then in select category, select *Factsheet*

You will see all month-wise factsheets of the MF. Try downloading the July 2016 Factsheet.

But, *What is a Mutual fund fact sheet? Why should I read it?*

A *mutual fund fact sheet* is a document that gives an overview of a mutual fund.

For new investors, the document provides necessary and easy details like the scheme objectives, whether it is suitable to you or not, the type of risks involved etc.

You can find out the minimum investment amount for the scheme, SIP details etc.

For existing investors, it proves excellent scheme specific information.

For instance,

we can know into which shares the fund manager has invested our money into.

How much money is put into which sector?

What returns the scheme game compared to its benchmark index?

If you are serious investor, do make it a habit to track the activities of your schemes.

You continued monitoring of the scheme helps you make timely decisions.

It should be remembered that the scheme investment money is our money, the investors collective money.

It is our responsibility to know where our money is going into.

I will explain these in step by step manner.

You can download the sheet from

If you open the sheet, you will notice the first page is the cover page.

The second page gives product labelling.

The product label tells you the risks involved with your scheme.

For instance, for DSPBR Microcap fund,

This Scheme is suitable for investors who are seeking*

• Long-term capital growth

• Investment in equity and equity-related securities in micro cap companies (beyond top 300 companies by market


So, this invests in small shares and hence will have moderately high risk.

On the other hand, if you take debt fund schemes, like liquid schemes, the risk will be low.

  • DSP BlackRock Liquidity Fund*

This Scheme is suitable for investors who are seeking* • Income over a short-term investment horizon • Investment in money market and debt securities, with maturity not exceeding 91 days

Risk is LOW.

So, just by looking at the product label, you should be able to determine few things:

1. Extent of risk involved

2. Returns that could be expected.

For example,

Equity oriented schemes are high risk - high return

Debt oriented schemes are low risk - low return

Risk is an inevitable thing in investments.

As we discussed earlier, unlike, insurance, there is no guarantee for returns in mutual funds.

You will enjoy returns when you take reasonable risk in accordance to your financial goal.

Sir what is better btwn mutual fund and sip and y?

@Kishan: If our financial goal has long time, say our retirement, or kids higher education after 12 years, equity schemes are better

If our financial goal is shorter, like within this year or next year, go for debt schemes. For example, saving for kids next year school fees. Or if you wanted to buy a bike next year.

Investing in SIP is always better than a single lumpsum buy.

Now lets skip to the 7th page of the fact sheet.

It deals with *DSP BlackRock Equity Fund*

It provides basic details about the scheme.

There will be separate sheets in the pdf file for each of the schemes offered by the MF.

Focus on the right side of the page.

You will get know the fund manager name and his experience, Investment Objective and asset allocation

Read the investment objective:

An Open Ended growth Scheme, seeking to generate long term capital appreciation, from a portfolio that is substantially constituted of equity securities and equity related securities of issuers domiciled in India.

It says,

An Open Ended = Allows buying and selling of mutual fund units on all trading days

growth Scheme = Invests in growth stocks (the other type of stocks are value stocks)

long term capital appreciation = for long term investors only. generally more than 1 or 3 years time frame

equity securities and equity related securities = generally equity shares. Can be listed, unlisted or preferrential shares

issuers domiciled in India = Only in Indian companies


Now lets look at the scheme asset allocation:

For instance, for this scheme asset allocation is:

Equity & Equity related securities: 90% to 100% &

Debt & Money market securities: 0% to 10%.

This means that the scheme is almost always invested to the extent of 90% into equities.

  • Redemption Proceeds*: Normally within 3 Business Days from acceptance of redemption request.

This means, if we sell units of the scheme, we get money in our bank account in t+3 working days.

The page will explain about features about Regular plans and Direct plans and Entry and Exit loads.

Entry load: Not Applicable

Exit load: Holding Period: < 12 months: 1% and if >= 12 months: Nil

So, if you invest today and hold for one year, there will be no load charged and since this is an equity scheme, returns are tax free under long term capital gains.

INCEPTION DATE: April 29, 1997

So this scheme is running for near to 19 years now.

TOTAL AUM AS ON JULY 31, 2016: 2486.71 Cr

This means, Rs 2486.71 Cr is invested in the scheme by people like you and me.

MONTHLY AVERAGE AUM AS ON JULY 31, 2016: 2,415.08 Cr

This means, on an average, this scheme is having investments of 2,415.08 Cr (month over month)

Understood the terms?

Now focus on the left side of the page.

It shows portfolio details. i.e in which securities has the fund invested in.

If you observe closely, the scheme invested:

HDFC Bank Limited 6.39 % State Bank of India 4.78 %

and so on

So, if you invested, say Rs. 100 in this scheme,

Rs. 6 is invested in HDFC Bank share,

Rs. 4 in SBI share etc.

This is one advantage of Mutual fund schemes. Your small investment will get invested in several shares in small parts.

One added advantage with mutual fund investing is that because they are large size funds, they can invest in:

1. Unlisted securities and

2. Preferential shares

which retail investors hardly could invest in.

Because the mutual fund manager can never know when investor gives redemption requests, some money is always kept liquid so as to honor the requests without distrubing the equity investments already made.

This is done in the form of investing in debt instruments.

A serious investor would have to keep an eye on how much into debt is the scheme invested in.

Assume you invested in some XYZ Mutual fund scheme.

If it is an equity scheme and the scheme is holding too many debt instruments, it means two possibilities:

1. More investors are buying and selling the units of the scheme.

2. Fund manager is bearish on equities and hence wants to save some cash for future investing.

There is also a note called:

Notes: 1. Weighted Average Expense Ratio : RP: 2.31% DP: 1.63% 2. Portfolio Turnover Ratio (Last 12 months): 0.89 3 Year Risk Statistics: 1. Standard Deviation: 18.72% 2. Beta: 1.16 3. R-Squared: 93.36% 4. Sharpe Ratio: 0.93

This is some statistical information about the scheme. I will explain you about this later today or tomorrow.

Finally, the fact sheet tells you into which sectors it has invested in.


Most mutual funds invest a substantial portion of funds into Banking stocks because Indian banking system is one of the most well regulated sector.

If you see, in the share market, after Nifty, Bank Nifty is the most popularly traded sector in the futures and options segment.

From the above screenshot of sectoral allocations, we can know into which sectors, the scheme has invested our money.

In this manner, for each of the scheme, the factsheet provides all the necessary information.

The fact sheet is equally important for new and existing investors.

Understood till here?

Now lets move to the Page 35 of the fact sheet

It shows *Comparative Performance of all schemes*

So, here we get to know, how well the scheme is performing on a relative basis.

If you see the image, it shows DSPBR Equity returns compared to Nifty 500 (benchmark index) and Nifty (Nifty 50).

It shows both in percentage terms and money terms.

It provides point to point returns: June 30, 2015 to June 30, 2016 etc

and Since Inception (CAGR) Returns

CAGR = Compound Annual Growth Rate

It is used to measure returns for investments that are held for more than 1 year period.

For less than one year, we have to use point to point return method

So, in our example:

DSPBR Equity fund gave returns of 20.44%

Compared to Nifty 500 returns of 12.81%

Nifty 50 returned of 11.33%

From this, we can say that the DSPBR Equity fund scheme did very well compared to Nifty.

Generally, invest in schemes that give substantially higher returns compared to the benchmark returns.

If a scheme does not give a widely higher returns compared to its benchmark, it might be dull and non performing fund.

Generally, a 3 to 5 year period is a good period to test if a scheme is performing well or not.


Now, please turn to page 46

It will show dividends that scheme has given so far.

Dividends are paid to those who chose the Dividend option (instead of Growth option)

Choose the dividend option if you wish to regularly book profit from the scheme.

So this is what we get from the Factsheet file!

If you are a serious investor, download factsheets on a monthly basis.

It will help you to compare what happened with the scheme during the month

For instance, you can download June and July 2016 factsheets and compare to see:

After u download the two pdf files, u need to compare:

if AUM increased or not

What new additions or exists happened in the MF

If there are any sectoral allocation changes etc.

This concludes our topic on Factsheets.

I will take up the topic on Portfolio and others tomorrow.

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