How do I read a fund factsheet?

Definition of fund factsheet

Factsheets provide an overview of funds and summarize the key characteristics, such as volume, past performance, costs, risk, investment strategy, largest positions and financial key figures. Taking a close look at factsheets is well worth it for investors to assess whether a product is suitable for their personal investment strategy. Factsheets are available from customer advisors and on the websites of fund providers.

To obtain a quick overview, look at the following elements which are part of every factsheet:

• Performance: this provides information on the fund’s past performance. Most funds compare the performance of their portfolio with a general market index – in other words, how the fund has performed over a certain period in comparison to the market. Please note that past performance is not a reliable indicator of how well a fund will do in future. The past has shown that the situation on the financial markets can change rapidly. While fund returns are normally reported after fund costs, no costs are incurred in the case of the benchmark index  An index is a basket of various securities selected according to particular criteria. It reflects the performance of this selection’s prices and documents them. An index also serves as a comparative value..
• The 10 largest positions: this overview of the fund’s main securities (for example, shares  A share is a security which gives investors a stake in a company. Companies raise capital by issuing shares. Shareholders have proprietary rights (e.g. entitlement to dividends) and membership rights (e.g. entitlement to take part in the general meeting and the right to vote). or bonds) helps to identify risk concentration. If, for example, you hold lots of shares in a particular company, you should not invest in a fund which places particular emphasis on the sector in which this company operates and which holds a high proportion of these shares itself. 
• The total expense ratio (TER) provides details of the proportion of the average fund assets accounted for by a fund’s charges. It contains all charges deducted from the fund assets over the course of a year, with the exception of transaction costs.
• Risk: ratings systems of the fund provider, the legislator and independent rating agencies provide information on an investment’s anticipated risk.
• Fund volume: the volume shows the sum of invested assets. Small funds (e.g. <CHF 30 million) are at risk of being dissolved due to low profitability, while very large funds can be closed under certain circumstances. Consequently, no new investments can be made in the fund anymore.