Fund factsheet

Of all the documents a mutual fund produces, the factsheet is the one people actually read. Investors, distributors, rating agencies, research analysts and the media all work from it.

And it is the one document nobody is required to publish. The workbook states this twice and in terms: publishing the monthly factsheet is not a regulatory requirement; it is a market practice followed by all fund houses on a voluntary basis, and monthly publication is part of an AMFI best practices guideline.

The reason it exists anyway is timing. The Scheme Information Document, which is mandatory, is updated twice a year. Between those updates the factsheet is where current performance lives — which is why the workbook says it "plays a vital role" in performance disclosure without ever being required.

Because a factsheet is a marketing and information document, SEBI's disclosure and advertising guidelines apply to it in full even though the document itself is voluntary. Voluntary to publish; not voluntary in content.

What it carries:

• Scheme basics — inception date, corpus (AUM), current NAV, benchmark, and a pictorial depiction of the fund's management style.
• Performance against the benchmark over the prescribed periods, with benchmark returns alongside, as SEBI requires; plus SIP returns.
• Portfolio — sector-wise and security-wise allocation for equity schemes, though some houses disclose only the top 10 holdings. Some disclose derivatives exposure; note that mutual funds may take derivative exposure for hedging but cannot take open derivative positions.
• For debt schemes — the rating profile of holdings and the scheme's exposure across rating baskets, plus average maturity and duration.
• Risk and portfolio measures — price-earnings ratio, beta, standard-deviation and the sharpe-ratio for equity funds.
• Investment details — minimum investment, plans and options, loads, expenses and systematic transaction facilities.

AMCs often attach market and economy commentary, which the workbook lists as its own analytical menu: index levels and yields, corporate results and earnings revisions, government spending and the fiscal deficit, inflation, interest rates, domestic and foreign portfolio flows, GDP, and overseas rate data.

SID        : mandatory, updated twice a year
Factsheet  : voluntary, published monthly (AMFI best practice)

So: the current month's performance lives in the factsheet,
    not in any statutory document.

A page of a typical equity factsheet, in the shape the workbook describes:

Now use it, which is the part the exam is really testing.

An investor holds Rs 5,00,000 in this scheme. The five-year outperformance is 1.3 percentage points a year. Over five years, on that holding:

At 17.9%: 5,00,000 × 1.179⁵ = Rs 11,37,600
At 16.6%: 5,00,000 × 1.166⁵ = Rs 10,74,500
Difference                     Rs    63,100

Rs 63,100 of alpha — and the factsheet gives you both numbers on the same line, which is exactly why SEBI requires the benchmark return to sit beside the scheme return.

And the number that qualifies it. A beta of 0.94 and a standard deviation of 13.8% say the outperformance came with slightly less market exposure than the index, not more. Had beta read 1.25, the same 1.3 points would be leverage rather than skill. The performance table alone cannot tell those apart; the risk box beside it can.

Redeem inside twelve months and the 1% exit load takes Rs 5,000 off a Rs 5 lakh redemption — the factsheet is also where that is disclosed.

Chapter 5.2 (Non-Mandatory Disclosures) introduces the factsheet and lists its contents; Chapter 11.9 (Scheme Performance Disclosure) repeats that it is not a statutory requirement and sets out the market-commentary metrics. Expect the direct question — is the fund factsheet mandatory? It is not — and a contents question distinguishing it from the SID and the KIM.

• The factsheet is not mandatory. The workbook says so twice. The SID, SAI and KIM are the statutory documents; the factsheet is AMFI best practice.
• Voluntary to publish, but fully regulated in content. SEBI's advertising and disclosure guidelines apply to it.
• Not every factsheet shows the whole portfolio. Some houses disclose only the top 10 holdings.
• Derivatives exposure disclosed in a factsheet is hedging exposure. Mutual funds cannot take open derivative positions.
• Monthly, against a SID updated twice a year. That gap is the factsheet's reason for existing.
• Past performance in a factsheet is disclosure, not a forecast — and the risk measures beside it are what stop a return number from being read on its own.