Every scheme publishes a monthly factsheet — typically one or two pages. It contains more useful information than almost any fund review you will read.
The scheme documents
Three formal documents sit behind the factsheet. All are free on the AMC's site.
- SID (Scheme Information Document) — the full detail: objective, strategy, where it may and may not invest, risks, fees, and the exit load structure
- KIM (Key Information Memorandum) — the short version
- SAI (Statement of Additional Information) — details about the AMC and trustee
The line to find in the SID is the asset allocation table: the minimum and maximum the scheme may hold in each asset type. That is the binding constraint on what the manager may do, and it matters far more than any marketing description.
What to look at on the factsheet
AUM
Assets under management — the fund's size.
Very small funds may be merged or wound up. Very large funds in small cap or mid cap categories face a real constraint: a large sum is difficult to deploy in smaller companies without moving their prices, and difficult to exit quickly when investors redeem. Size is a genuine consideration in those categories, and largely irrelevant in large cap and index funds.
Expense ratio
Stated for both direct and regular plans. Compare against category peers, not against zero.
Portfolio and concentration
The full holdings list, usually with the top 10 and their weights.
Two checks:
Top 10 concentration. If the top 10 holdings are a very large share of the portfolio, the fund is concentrated and its outcome depends on a small number of decisions.
Overlap with your other funds. If you hold four equity funds and they share most of their top holdings, you have four expense ratios and one portfolio. This is extremely common and is the main reason "I have diversified across eight funds" often means nothing at all.
Number of stocks
A focused fund might hold 25; a broad fund 60 or more. Neither is better in the abstract — but 25 stocks means each decision matters four times as much.
Benchmark and TRI
Every scheme names a benchmark index it is measured against. Since 2018 comparison must be against the Total Return Index (TRI), which includes dividends received from the underlying shares — a fairer comparison than a price index, which excludes them.
The question worth asking of any active fund: has it beaten its benchmark after costs, over long periods? If not, a low-cost index fund tracking that same benchmark was the better way to get the same exposure.
Riskometer
Six levels — Low, Low to Moderate, Moderate, Moderately High, High, Very High — reviewed monthly and disclosed by the scheme. It is a standardised, rule-based indicator rather than an opinion. It tells you the category of risk, not how much you might lose.
Fund manager and tenure
Who manages it, and since when. A ten-year record achieved by a manager who left last year says little about the fund today.
Portfolio turnover
How much of the portfolio is traded in a year. High turnover means higher transaction costs borne by the scheme and a short holding period per stock.
For debt funds specifically
- Average maturity / Macaulay duration — the higher these are, the more the NAV moves when interest rates change
- Credit quality breakdown — how much sits in the highest-rated paper versus lower rated
- Yield to maturity (YTM) — an indication of the portfolio's yield, not a promised return
Returns: read them properly
Point-to-point returns ("5-year return: 18.4%") depend entirely on the two dates chosen. A period starting at a market bottom flatters any fund.
Rolling returns compute the return over every possible window of a given length across the period, then summarise them. This removes the luck of the start date and is far more honest.
CAGR is the annualised rate. For anything under a year, returns should be stated absolute — an annualised figure from three months is meaningless.
XIRR is the right measure for a SIP, because money went in at many different times.
What is not on the factsheet, and matters
Your own holding period. The single biggest determinant of your result is how long you stay invested, and that is not a property of the fund.
Whether it fits what you already own. A very good small cap fund is a poor decision for someone whose portfolio is already 60% small cap.
Key takeaways
- The SID's asset allocation table is the binding constraint on what a fund may hold.
- Check top-10 concentration and overlap with your other funds — several funds often mean one portfolio.
- Active funds should be judged against their benchmark's Total Return Index, after costs.
- Rolling returns are more honest than point-to-point returns; XIRR is the right measure for a SIP.
- Maximum drawdown is more useful than any return figure, because it tells you what you would have had to sit through.
Check your understanding
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