Fund Factsheets: Hygiene Factors And Trends

Fund factsheets are important documents that provide basic but vital information relating to a mutual fund or an exchange-traded fund. Fund factsheets help new or existing investors learn about the fees associated with a fund, its past performance and the fund manager’s risk assessment of the fund. They also contain details regarding the fund manager and the index or benchmark the fund may be tracking or trying to beat. Fund factsheets provide the information necessary for an investor to decide to invest in it.

Are fund factsheets evolving?

Fund factsheets are marketing material for the mutual fund agency or the exchange-traded fund. The factsheet should contain facts and information that would enable an investor to understand the fund and decide whether to invest in it. The increasing popularity of digital investment and direct investment means that factsheets also need to evolve to the digital format. A digital fund factsheet enables a company to provide more information to existing or potential investors. A key advantage is the ability to use dynamic information, giving investors access to near-real-time data. Fund factsheets were historically prepared on a monthly or quarterly basis, but they can now be provided on a weekly or daily basis with updated prices, allowing investors to view the fund’s performance earlier than if the factsheet were distributed physically. Digital factsheets also allow for more creativity on the part of the fund or company publishing them – in terms of using charts and analysis unique to it.

Is there a regulatory format for fund factsheets?

Fund factsheets do not have a regulatory format, and mutual funds and companies are free to provide information they deem important for the investor or potential investor. However, fund factsheets should contain a basic level of hygiene to ensure the proper information is made available to their users. While digital factsheets may be the future, physical factsheets need to be prepared and laid out regularly. A company printing its fund factsheets must ensure they are available to investors within the stipulated timeframe, making the information useful and relevant. Maintaining fund factsheet hygiene requires information to be presented in a manner that is easily understandable to users. Fund factsheets may use tables and diagrams including charts to explain the data. The main aim is to make the information useful for investors.

Are digital factsheets the future?

The pandemic has fast-tracked the use of digital technologies worldwide, making sense that physical factsheets be moved to digital versions. Digital fund factsheets allow for dynamic availability of information, freedom to prepare larger factsheets with more information and easy distribution. Investors can view them on their mobile phones or computers and take printouts, if necessary.

Conclusion:

Fund factsheets help investors decide to invest in funds. Mutual funds and exchange-traded funds need to evolve with the times and move towards digital factsheets that are easier for investors to use and that provide those who prepare them more freedom in preparation. Acuity Knowledge Partners prepares fund factsheets, including interactive factsheets, for its clients using its proprietary tools.