Every mutual fund publishes a monthly factsheet — a document packed with information about the fund’s performance, portfolio, and key metrics. For a beginner, it can look overwhelming. But once you know what to look for and what to ignore, a factsheet becomes a powerful tool for evaluating whether a fund belongs in your portfolio.
What is a factsheet?
A factsheet (also called a fact sheet or fund card) is a one to two page document published monthly by every mutual fund AMC. It summarises everything you need to know about a fund: what it invests in, how it has performed, how risky it is, and how much it costs.
You can find factsheets on the AMC’s website, on platforms like Moneycontrol and Valueresearchonline, or on the AMFI website.
Section 1: Fund objective and category
The factsheet begins with the fund’s investment objective — for example, ‘to generate long-term capital appreciation by investing in equity and equity-related instruments of large-cap companies’.
More important is the category and sub-category assigned by SEBI — Large Cap Fund, Mid Cap Fund, Flexi Cap Fund, Liquid Fund, etc. This tells you what the fund is allowed to invest in and helps you compare it against true peers.
Section 2: NAV and fund size (AUM)
NAV (Net Asset Value): The current price per unit. On its own, NAV tells you nothing about whether the fund is cheap or expensive — a ₹500 NAV fund is not necessarily better than a ₹50 NAV fund. What matters is the return from when you invested.
AUM (Assets Under Management): The total money invested in the fund by all investors. Larger AUM generally means better economies of scale and more liquidity. However, very large AUMs in mid and small cap funds can be a disadvantage — it becomes harder to take positions in smaller companies without moving prices.
Section 3: Returns
This is the most-read section — and the one most often misread.
Factsheets typically show returns for 1 year, 3 years, 5 years, and since inception — alongside the benchmark return (e.g., Nifty 50 TRI or Nifty Midcap 150 TRI).
What to look for:
– Consistency: Does the fund consistently outperform its benchmark over 3 and 5 years?
– Relative performance: How does it compare to the benchmark and category average?
– Downside behaviour: Look at how the fund performed during market crashes (2020 Covid crash, 2022 correction). A fund that falls less and recovers faster is better managed.
What to ignore: 1-year returns. These are too short-term to be meaningful and are heavily influenced by luck and market timing.
Section 4: Portfolio holdings
This section shows the top 10–20 stocks the fund holds and what percentage of the fund is in each.
Check for:
– Concentration risk: If the top 5 stocks make up 50%+ of the fund, it is highly concentrated
– Sector allocation: Is the fund overexposed to one sector like IT or banking?
– Overlap with your other funds: If you have two large cap funds and they both hold the same top 10 stocks, you are not diversified — you are just paying double fees
Use tools like Valueresearchonline or Morningstar India to check portfolio overlap across your funds.
Section 5: Risk metrics
Standard Deviation: Measures how much the fund’s returns fluctuate. Higher SD = more volatile.
Sharpe Ratio: Return earned per unit of risk. Higher is better. A Sharpe ratio above 1 is generally considered good.
Beta: Measures sensitivity to market movements. A beta of 1.2 means if the market rises 10%, the fund typically rises 12% — and vice versa.
Alpha: Excess return over the benchmark. Positive alpha means the fund manager is adding value beyond simply tracking the index.
For beginners, focus on Sharpe ratio and consistency of returns rather than trying to optimise every metric.
The bottom line
Reading a factsheet takes 10 minutes once you know what to look for. Use it to verify consistency, check portfolio concentration, confirm the expense ratio, and compare against the benchmark.
Never select a fund based on 1-year returns alone. The factsheet gives you the full picture — use it.