The document nobody reads

Every mutual fund publishes a monthly factsheet — a two-or-three-page summary of what the fund holds, what it costs, and how it has done. It’s free, it’s on every AMC’s (asset management company’s) website, and it is the single most useful document about a fund that almost nobody opens.

This post walks through it section by section, using everything the previous eight posts built. It closes the first half of the series, so it also says plainly what a factsheet cannot tell you.

Section by section

Scheme details

Field What to actually check
Category SEBI-defined. Decides what the fund is allowed to hold and which benchmark applies
Inception date How much history exists. A fund launched after 2013 has never seen a 2008
Benchmark Is it a TRI (total return index)? The last post explains why this matters more than it looks
Fund manager & tenure A ten-year record under a manager who left last year is not this fund’s record
AUM (assets under management — the fund’s size in ₹) Very large AUM can constrain a small-cap strategy; very small AUM raises viability questions

Manager tenure is the field most often skipped. Performance history belongs to whoever produced it.

Expense ratio

Two numbers, direct and regular. From the expense post: the gap between them is pure distribution commission, and on an actively managed fund it was 0.83 percentage points a year — about 9.5% of the final corpus over nearly thirteen years.

Check which plan you actually hold. Many people assume direct and own regular. The same section usually shows the exit load — the charge for redeeming within a set period (often 1% within a year for equity funds) — which matters if you might need the money early.

Portfolio

  • Top holdings and concentration. Top-10 weight tells you how concentrated it is. A fund with 45% in ten names behaves very differently from one with 20%.
  • Sector allocation. Two funds in the same category can hold entirely different sectors.
  • Number of holdings. In our view, a fund with fifty-plus stocks starts to resemble an index, at a considerably higher fee.
  • Portfolio turnover. How much was traded. High turnover means more trading costs: brokerage and transaction charges are inside the expense ratio, but the price impact of the fund’s own trading isn’t itemised as an expense. A later post in this series covers the ratio in full.

The overlap check is worth doing once: if you own four large-cap funds, compare their top-10 lists. Owning the same twelve companies four times over is not diversification, and in our view it’s one of the most common portfolio errors among investors who own many funds.

Performance

Point-to-point returns for 1, 3, 5 years and since inception, alongside the benchmark. As the point-to-point returns post showed, these all end on the same date — so they share the same endpoint bias. The same fund showed 2.56% and 23.92% over five-year windows depending on the start month.

If the AMC publishes rolling returns or a SIP-return table, that’s more informative. If it doesn’t, you can compute them yourself — that’s what the Python in the rolling returns post is for.

Risk measures

Usually standard deviation, beta (how much the fund tends to move when its benchmark moves 1%), Sharpe, sometimes maximum drawdown. From the volatility and Sharpe post: always check the period and the risk-free rate, and never compare a Sharpe across categories.

And note what’s usually missing: drawdown recovery time. A factsheet may tell you the fund fell 59.7%. It rarely tells you the last such fall took almost six years to recover. That’s the number that decides whether you’d still have been holding.

A worked read

The fund used throughout this series, read as if off a factsheet:

Field Value
Fund UTI Nifty 50 Index Fund
Category Index Fund (Nifty 50)
History available 2006-04-03 to 2026-03-31 (20.0 years)
Return over the available history 10.2% a year
Volatility 20.99%
Sharpe (rf 6.5%) 0.176
Maximum drawdown -59.7% (2008-10-27)

All figures computed from AMFI NAV history via mfapi.in, 3 April 2006 to 31 March 2026. Historical data, for illustration only. The free AMFI history starts in April 2006, so the return row covers that window — a real factsheet’s “since inception” figure runs from the fund’s launch date and can differ.

And the things a factsheet would not have told you, which this series computed:
5-year rolling returns -1.58% to 26.14%, median 12.25%
10-year windows below 8% a year 14.0%
Recovery from the 2008 fall 2,162 days (5.9 years)
5-year SIP from Jan 2007 XIRR of −0.02%
Cost of the regular plan 0.125 pp a year on this fund

Same fund. The second table is the one that describes what owning it was actually like.

What a factsheet cannot tell you

The honest close, in the spirit of what technical analysis cannot do.

Whether past returns will continue. The strongest, most consistent finding in fund research is that past performance predicts future performance weakly at best. Every factsheet carries the required warning, and it is not boilerplate — it’s the finding.

Whether the manager’s record was skill or luck. Distinguishing the two needs far more data than any individual track record contains. A five-year record is a small sample, and thousands of funds competing guarantees some excellent records arise by chance alone.

What the portfolio holds today. Factsheets show month-end holdings, published with a lag. An actively traded fund may look quite different now.

What it costs beyond the expense ratio. The price impact of the fund’s own trading isn’t in the TER (total expense ratio — the expense ratio’s official name); brokerage and transaction charges are. Neither is the tax you’ll pay on redemption.

Whether it suits you. Nothing in the document knows your horizon, your other holdings, or whether you’d sell in a 60% drawdown. Suitability is not a property of the fund.

How to actually evaluate a fund

Condensed from the whole series:

  1. Check the category and benchmark first. Decide what it’s meant to do, and whether the benchmark is TRI.
  2. Check the expense ratio, and which plan you hold.
  3. Ignore the headline point-to-point returns. They’re one window, ending today.
  4. Compute rolling returns yourself. The distribution, not one number. The rolling returns calculator does it for any NAV series you paste in.
  5. Look up the worst drawdown and how long recovery took. Ask honestly whether you’d have held.
  6. Check overlap with what you already own. Four funds holding the same companies is one bet.
  7. Check manager tenure against the track record’s period.
  8. Match the horizon to the asset. Three-year money does not belong somewhere that has taken six years to recover.
  9. Write down what would make you sell — before you buy. If the answer is “a fall,” you’ve planned to sell at the bottom.

Common mistakes

  • Reading only the returns table. It’s the least informative section and the most prominently placed.
  • Ignoring manager tenure. The record may belong to someone who left.
  • Owning many funds and calling it diversification. Check the overlap.
  • Assuming the benchmark is fairly chosen. Check it’s TRI and that it matches the mandate.
  • Comparing risk measures across categories. Different denominators, different meanings.
  • Treating the risk warning as legal boilerplate. It’s the most evidence-backed sentence in the document.

Takeaway: A factsheet tells you what a fund holds, what it costs, and how it has done over windows ending today — genuinely useful, and roughly half of what you need. The rest you compute yourself — the distribution of rolling returns, how deep the falls went and how long they lasted, and what the fee compounds to — and no factsheet can tell you whether any of it will happen again, or whether the fund suits you.