Learning to speak the language of funds


Michael Pashley

Private Client Consultant

Understanding the information provided on a fund factsheet can give you a good headstart in helping you to check that your selected funds match your attitude to risk and that the fund is delivering in line with your expectations. Michael Pashley provides a guide to the common information provided on fund factsheets.

A fund factsheet can take many formats, depending on the manager and provider of the fund factsheets. However, in the main, fund factsheets provide information on three key areas:

1.    Fund facts

2.    Fund performance

3.    Where the money is being invested

Knowing more about where your money is invested can help you understand how your funds are performing and to pick out the key indicators from Richard Wallis’ monthly market review.

1.   Facts about the fund

A fund factsheet will often show fund size and the fund manager name. These are not critical details on their own, but they can highlight key changes such as a new fund manager which should raise questions for investigation.

The sector and the fund objective should reassure you that you are in a fund which appears to be in line with your risk appetite. Many sectors are categorised by the proportion of share investments in the fund i.e. 20-60% is Mixed Investment.

Funds with relatively recent launch dates i.e. within the last five years can be harder to assess as they do not have an established track record and may therefore be deemed more risky than established funds in the same sector.

2.   The performance of the fund

The cumulative performance shows the total performance over the time period. Discrete performance shows the performance over set time periods e.g. each year, or over a certain time period.

To provide a benchmark, performance is normally measured against the sector average. The fund performance will also be ranked within the sector so for example 15/137 means that the fund was 15th of 137 funds in the sector over that time period.

A further indicator is the quartile ranking which shows which quartile the fund performance is in. Above average performance means that the fund will be in quartile 1 or 2. But you should remember that you are usually investing for the medium to long term so a high quartile ranking over the short term may not translate into strong performance over the longer investment timescales.

3.   Where the money is being invested

The asset allocation shows the main asset classes where the fund invests and additional regional breakdowns or top 10 holdings are also shown. The Top 10 holdings can either be other funds where a fund is a ‘fund of funds’ or a list of company shareholdings or bonds. Fund managers will review the investments in the fund but generally the main asset class and regional breakdowns are unlikely to shift significantly.

At Origen, we operate and monitor a list of recommended funds covering each sector. Working with Morningstar, one of the world’s leading providers of independent investment research, our Research and Investment Team monitor these funds and undertake stringent checks and due diligence on an ongoing basis to make sure the funds continue to deliver against their mandate.

When you discuss your financial needs with our consultants, you can help to identify suitable funds for your investment needs. If you chose funds which are not on our recommended fund list, we will not monitor these funds but we will review them in our meetings.

This article is for information only and is not to be taken as Financial Advice. CA2132 Exp. 02/19

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