When retail investors are exposed to new funds or funds that have already been invested, they often use fund factsheet. In the retail funds authorized by the HKSFC, all funds must provide a fund factsheet for investors’ reference. On the iFund platform, investors can view fund leaflets by click a button. Although the information provided by the fund leaflet is very succinct, investors often do not know how to read the document correctly.
1. Fund name and fund house
In the fund’s monthly report, the most important are the fund name and fund company. Fund names often include information on investment assets, regions, styles, and even different share classes. Through the name of the fund, investors can directly understand what is behind in their investment funds. In addition, investors cannot ignore the information of fund companies. The fund company is your asset manager. Investors must do their own research or through expert analysis to understand that the fund company meets your requirements. By further understanding the fund company’s investment philosophy, methods, historical records, and asset size, it is possible to roughly screen out candidates.
2. Fund Profile
After the name of the fund, investors often see the fund profile. Although the profile in the fund leaflet has condensed the most important information in the Product Profile Summary (KFS), investors will ignore these descriptions. We believes that investors can focus on two words: Investment Objectives and Investment Strategy. Read the fund’s description of the investment objectives, and investors can confirm whether they meet their investment needs. By analyzing the fund’s investment strategy, investors can judge whether they agree with the fund manager’s investment philosophy. Two factors are the most important factors for investors to choose funds.
3. Fund information
The information of the fund includes some of the more important information of the fund. For example, the inception date, various kinds of fees, fund size and share classes are all worthy of attention. The earlier the date of establishment, the investors can know more about the performance of the fund in different market environments. The fund’s expense rate can reflect the cost that investors need to invest in the fund. Fund leaflets usually only indicate various expense rates, but some factsheet publish the Total Expense Ratio, which is a better indicator of the fund’s operating costs.
The size of the fund mainly refers to the amount of assets managed by the fund. If the fund is too small, it will face the problem of insufficient liquidity when faced with redemption. At the same time, the small size of the assets will also lead to higher expense ratios. Fund can be divided into accumulation and distribution. The accumulative share class reinvests the profit distributed by the fund, and the distribution category distributes the distributed cash or fund unit to the investor.
4. Fund performance
Fund performance is usually composed of numbers and is relatively straightforward. Investors can analyze the stability of fund performance through the returns of different years and different calendar years. At the same time, by comparing the benchmark, you can understand the relative performance of the fund and analyze whether the fund manager can create additional returns for the fund.
5. Position characteristics
Advanced investors can also further analyze the style of the fund through the characteristics of some fund positions. In terms of equity funds, investors can understand the difference in style between the fund and the benchmark index through industry, size and country distribution. In the case of bond funds, investors can learn whether fund managers are actively managing through duration, credit ratings, and currency positions.