04 Jun 2024 | Edukatips

Mutual Fund Performance Analysis #1 – Introduction to Fund Fact Sheet

Just like researching the specifications of a car before buying, it’s essential to understand the specifics of Mutual Fund products before making a decision. At BCA, you can learn more about Mutual Fund product specifications through the Fund Fact Sheet.

What is Fund Fact Sheet?

Fund Fact Sheetis a monthly report published by the Investment Manager, containing information on product performance, asset composition, and securities portfolio at the end of the month for each Mutual Fund. Here are some key elements you should pay attention to:

Notes: All information contained in the Fund Fact Sheet above is fictitious and used for educational purposes only. Any resemblance to actual products, institutions, or performance is purely coincidental.

1. Investment Manager (MI)

This section contains the name of the Investment Manager (MI) responsible for issuing the Fund Fact Sheet. It’s crucial to assess the credibility and performance of the MI before deciding on fund placement. One of the benefits of investing with BCA is that the listed Investment Managers and their products have been carefully chosen by BCA.

2. Mutual Fund Name & Fund Fact Sheet Period

This section contains the name of the Mutual Fund and the cut-off date. For example, for the February 2024 period, all details including the total Net Asset Value (NAV), unit price commonly known as Net Asset Value per Participation Unit (NAV/PU), asset allocation, and fund performance are current as of 29 February 2024.

3. Information on Total NAV, Unit Price (NAV/PU), and Fees

This section provides comprehensive information about Mutual Fund products, including the launch date, currency, total Net Asset Value (NAV), unit price (NAB/UP), and various fees applicable to investors.

  • The NAV/PU indicates the performance of the mutual fund per unit of participation and is not subject to tax. If a Mutual Fund product pays out dividends, the NAV/PU will decrease by the amount of the dividends. NAV/PU is calculated daily using the following formula:
  • NAV / PU
    Market value of the investment - indirect costs - dividends distributed (if any) / Number of participation units
  • Mutual fund fees are generally divided into two categories:
    • Direct Costs
      • Transaction fees: fees paid by investors directly when making transactions to buy, switch, or sell mutual funds. These fees do not affect the net asset value (NAV) of the fund.
    • Indirect Costs
      • Management fees: fees for the investment manager who has managed the fund during the placement period. These fees are deducted directly from the NAV.
      • Custodian fees: fees for the custodian bank as the depositary and administrator of the mutual fund. These fees are deducted directly from the NAV.

4. Mutual Fund Portfolio Composition & Allocation

This section contains information about the investment policy, portfolio allocation, and the 10 largest holdings within the portfolio.

  • The investment policy determines the category of a mutual fund as follows:
    • Money Market Fund: 100% of the fund consists of money market instruments (deposits or bonds <1 year).
    • Fixed Income Fund: at least 80% of the fund is invested in government or corporate bond instruments.
    • Balanced Fund: maximum of 79% of the fund is allocated to bonds or stocks.
    • Equity Fund: at least 80% of the fund is invested in equity instruments.
  • Portfolio allocation provides information about the specific placement of funds in a certain period and determines the fund’s performance. 

5. Risk Classification

This section describes the level of risk associated with a Mutual Fund product based on the composition of assets in the portfolio. Risk exposure (from low to high): money market funds, fixed income funds, balanced funds, equity funds.

6. Mutual Fund Performance

This section contains information about the performance of the Mutual Fund over various periods, such as year-to-date, 1 month, 3 months, 6 months, 1 year, and up to 5 years. The performance is compared to a benchmark determined by the Investment Manager. The chosen benchmark is typically an asset class with similar characteristics for comparison purposes. For example:

  • Money Market Fund benchmarks usually use the average deposit interest rate.
  • Fixed Income Fund benchmarks usually use INDOBeX Government, which is a government bond index.
  • Equity Fund benchmarks usually use stock indices such as JCI or LQ45.

This section may also include information on dividend distributions for Mutual Fund products that offer dividends, specifying the period and amount of dividend distribution.

Now that you have learned and understood how to read a Fund Fact Sheet, please keep in mind that it does not directly indicate whether a mutual fund is good or not.It’s important to compare the Fund Fact Sheet of one mutual fund with others. You can access the Fund Fact Sheet for each BCA Mutual Fund product through the myBCA application by following these steps:

  1. Log in to myBCA
  2. Choose Welma
  3. Go to Mutual Fund
  4. Select one of the Mutual Fund products
  5. At the bottom, click on the Fund Fact Sheet
  6. Analyze the Fund Fact Sheet

Let’s begin investing in Mutual Funds using the Welma feature in myBCA. If you don’t have myBCA yet, you can download it from the App Store or Play Store!