How To Read a Fund Fact Sheet Easily

Hi, Moduers!

In today’s digital era, many things can be done easily online. One of them is investing in mutual funds. But do you know? With all of these conveniences, you also need to know what kind of mutual fund you are buying. One way to identify the mutual fund you will buy is to read the fund fact sheet.

“A fund fact sheet summarizes a mutual fund product report issued by a fund manager that contains mutual fund performance, total asset under management, and portfolio.”

By reading and understanding the fund fact sheet, you can compare and choose the mutual fund that suits you and your goals the most.

Below are 5 things that you should consider when you read the fund fact sheet you can follow. I hope this helps, Moduers!

The example below is taken from the fund fact sheet of Manulife Dana Kas II.*

Manulife Dana Kas II


Below are 5 key points that you must consider when you read the fund fact sheet:

1. Investment Objectives

To achieve your investment goals, ensure that the mutual fund products’ objectives are per your goals. For instance, you want your emergency fund to get a higher yield than the savings or bank deposits can offer and liquid. You can then consider investing in a money market fund since it aims to provide investors a stable income with high liquidity and maintain its Net Asset Value (NAV).


2. Cost Information in Mutual Fund

In this section, you will find some information about the mutual fund, such as inception date, Net Asset Value (NAV), transaction fees (subscription, switching, and redemption fee), and management fee. But don’t worry. At Moduit, all transaction fees are free.


3. Major Risks and Risk Profile

Every investment instrument has different types and levels of risk. Therefore, you need to make sure that your risk profile matches the mutual fund’s risk profile. However, even if it is different, it does not mean you can not invest in that product, but you need to adjust the investment portion that suits your risk profile.


And then, let’s identify risk factors that may exist in a mutual fund :

  • Unit Value Reduction

Unit value reduction occurs when the price of assets in the mutual fund portfolio (stocks, bonds, and/or money market) decreases, which affects the value of the mutual fund investment.

  • Liquidity Risk

It means fund managers find difficulties in providing the cash when investors want to withdraw their investment. According to the Financial Services Authority’s (Otoritas Jasa Keuangan/OJK) regulation regarding mutual fund in the form of collective investment contracts (Kontrak Investasi Kolektif/KIK), fund managers have limited time to shell out investors’ money up to 7 working days (Saturday, Sunday and holidays are not counted) after selling instructions are given by investors. It means investors will receive the disbursement up to 7 working days after they sell the mutual fund.

  • Changes in the Allocation of Securities in Investment Policies

Every investment instrument has a different level of risk. In one type of mutual fund, there is more than a kind of security or asset. For example, there are bank deposits or Bank Indonesia Certificates, and bonds with less than a year of the maturity date in the money market mutual fund. Bonds with a maturity date of less than a year can be considered as low-risk investment instruments. But compared to bank deposits, the risk from the bonds is higher.  Therefore, if there is a change in the allocation of mutual fund securities, it can change a mutual fund product’s risk level.

  • Changes in Economic and Political Conditions

Moduers, economic and political conditions that affect the capital market will certainly affect the securities contained in mutual funds. However, the risk of changes in economic and political conditions tends to be lower for money market mutual fund than the other kind of mutual fund, since a money market mutual fund portfolio consists of money market products such as bank deposits, Bank Indonesia Certificates (SBI), and bonds with a maturity date less than one year. On the other side, fixed income mutual funds, equity funds, and balanced mutual funds have a higher risk of changes in economic and political conditions since most of their portfolios consist of capital market products such as stocks and bonds.

  • Change in Tax Regulations

Currently, profits from mutual funds are not subject to tax. In calculating the NAV, taxes obligation has been fulfilled, so it is no longer subject to tax. If the tax regulations are changed one day, this may affect the returns that investors will receive.

  • Interest Rates

Interest rate changes will affect the return rate on deposits, Bank Indonesia Certificates, and bonds in the mutual fund portfolio. If the bank interest rates fall or decrease, the yield on Bank Indonesia Certificates and bonds will be more attractive (higher than the yield on bank savings and time deposits). Vice versa.

  • Default Risk

Default risk can occur if the fund manager and custodian bank cannot resell or receive investment securities that are already due.

  • Risk of Dissolution and Liquidation

A mutual fund can be dissolved and liquidated if its managed funds are below IDR 10 billion for 120 consecutive exchange days and if the investment manager violates the Financial Services Authority (Otoritas Jasa Keuangan/OJK).


4. Investment Performance and Historical Performance Graph

You can consider and compare when buying a mutual fund is the investment performance and historical performance charts. A good mutual fund’s performance will be consistently above the benchmarks. It is different for index mutual funds, aiming to resemble the benchmark measured by a tracking error. So for an index fund, choose a mutual fund that resembles the benchmark persistently and consistently.


5. Information on Top Holdings or Main Composition in a Mutual Fund Portfolio

Last but not least is mutual fund top holdings information, which usually consists of 5 to 10 issuers. The top holdings list is a list of the largest securities holdings in a mutual fund portfolio.

For example, on the top 10 holdings list of Manulife Dana Kas II, there are ADMFIJ (corporate bonds of Adira Dinamika Multi Finance), ASIIIJ (corporate bonds of Astra International), BEIAIJ (corporate bonds of Eximbank), et cetera. So, it means most of Manulife Dana Kas II assets are invested in those 10 issuers, including corporate bonds of Adira Dinamika Multi Finance, Astra International, Eximbank, and others.

And that is all from me. It is easy to read the fund fact sheet. I hope you find out this article useful and helpful. Don’t forget to share it with your friends, too!

Salam Moduit!


*) Disclaimer: all pictures and explanations related to mutual fund products in this article are only for illustration purposes, not investment recommendations.