Fund Fact Sheet or another name we are familiar with is the prospectus summarizing important information of the mutual fund. It will provide important information of the mutual fund, such as investment policy, return characteristics, risks, and important information that investors like us should know about that mutual fund.
“Mutual funds” are another important financial and investment tool for working people that will help make retirement investment plans easier and faster.
But we can’t just invest if we don’t study and understand what we are investing in. Because investing in mutual funds has details and involves investment risks.
Investing without researching or evaluating the risks is like being blind and feeling an elephant. It becomes more of a speculation or relying on luck than being a real investor.
Mutual Fund Investors Must Understand “Fund Fact Sheet”
“Fund Fact Sheet” is a prospectus that summarizes important information of the fund so that investors can study the information and compare it with other funds of the same type from many asset management companies before making an investment decision.
It is our investment blueprint because the prospectus, which summarizes the important information of the mutual fund, will tell you what the properties of that fund are, whether they match the investment objectives, and whether they are consistent with the risks we accept.
Therefore, before deciding to invest in any fund, we must read the Fund Fact Sheet and understand it in detail so that we do not invest in the wrong objectives and our financial and investment goals.
What does the “Prospectus Summary of Important Information of Mutual Funds” tell us?
If we request “Fund Fact Sheet” information of a particular fund from a fund management company (AMC) or from a fund seller, or try downloading information from a website from https://market.sec.or.th/public/idisc/th/Product/Filing , we will get a “Prospectus summarizing important information of a mutual fund” of the fund that we are interested in or want to study.
The information in the “Prospectus Summary of Important Information of Mutual Funds” that is required for consideration in selecting a fund is mainly as follows:
Basic information about mutual funds
Is the information we are considering the latest information? Let’s look at the top right corner to see if it is the latest updated information. Many people make mistakes by looking at old information, which may lead to analysis and choosing the wrong fund.
Mutual Fund Name: Check the name of the fund to make sure it is the one you are interested in and is correct. Since there are many funds with similar abbreviations, you have to make sure that you are looking down on yourself.
Types of mutual funds: What type of fund is it? For example, equity mutual funds, debt mutual funds.
Investment policy or proportion of types of assets invested
See what types of assets the fund invests in, such as whether it focuses on stocks listed on the Stock Exchange of Thailand.
What kind of investment strategy does the fund have? Active or passive? (Active funds are those that invest to generate returns that beat the benchmark or indicator (Bench mark), while Passive funds are those that invest to generate returns that are close to the indicator > Normally, if it is an active fund, investors will expect high returns, which comes with higher fund fees than passive funds.
Mutual Fund Risk Level
Mutual funds have a risk level from 1 to 8, where level 1 is low risk, such as money market funds that invest in the country. Level 8 is very high risk, such as mutual funds that invest in commodities such as oil and gold.
It depends on how much risk you can accept and whether it is appropriate for the risk level of the mutual fund you are going to invest in.
Normally, before purchasing a fund or making the first investment, the fund sales representative will have us do a suitability test to test what level of risk we can accept.
When it comes to investing, everyone wants high returns and low risks. But in reality, risk and returns go hand in hand, as the saying goes, “high risk, high return.”
Name of assets and proportion of asset types in which the mutual fund chooses to invest
We need to look at what types of assets the mutual fund invests in and what proportion of them it invests in.
Does it match your investment policy? Then let’s look at the list of the top 5 most invested assets.
The fees of mutual funds are divided into 2 parts: the fees charged by mutual funds, calculated as a % per year of NAV, are the expenses for fund management, such as management fees, trustees, and registrars, which are calculated and deducted daily.
And the fees charged to unitholders are calculated as a % of the trading value, such as sales fees, redemptions, and exchanges, which will be included in the trading price.
Historical Performance
If the mutual fund we are interested in has been open for a while, looking at past performance will be useful because the “Prospectus Summary of Important Information of the Mutual Fund” will show past performance, compare it with the standard criteria (Benchmark) that is the criteria for measuring the performance of the mutual fund, and compare it with peers (Peer Performance).
We also compare each year to see if the fund has consistent returns, if it fluctuates, and compare it to the benchmark to see if it is higher or lower.
We can also compare it with our friends in the same group to see where we are in our group. If the return of the fund we are interested in is in a low percentile, it is even better because the low percentile group is the group that has the top returns, such as the 5th Percentile group is the group that has the top 5% returns of the group.
Looking at returns is information that gives us some confidence, but don’t forget that past performance does not guarantee future performance.
Other information
Does the fund have a dividend payment policy? > Some people want returns along the way, so
they are suitable for funds that pay dividends. However, some people like to hold for a long time for a large sum of money at the end, so they are suitable for funds that do not pay dividends. Because when the fund does not pay dividends, that sum of money will be added to the fund and increase the value of the fund.
Investment unit trading information
In this section, each mutual fund will specify the date, time, and minimum amount for buying and selling investment units, clearly stating, for example, you can buy every business day from 8:30 a.m. to 3:30 p.m. and the minimum value for the first purchase is 500 baht or the minimum value for the next purchase is 500 baht, etc.
If you have read up to this point, then you will know how important the “Prospectus Summary of Important Information of Mutual Funds” is?
Finally, do not forget that all investments have risks, but if you do not invest or save money from now on, it will be even riskier. And if you understand the information in the “Prospectus Summary of Important Information of Mutual Funds”, we will be able to invest in the way that meets our needs and is most suitable for us.
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