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Investment offer Documents in Mutual funds

MUST READ DOCUMENTS BEFORE INVESTING IN A MUTUAL FUND

Everywhere we see advertisements for Mutual Funds, whether on television, the Internet, or in newspapers, the following disclaimer appears at the end of the advertisement:

“Investments in mutual funds are subject to market risk. Please read all fund documents carefully prior to investing.”

In any case, the advertisement states that it has two parts; let’s attempt to understand each one separately.

The first part, “Mutual Funds investments are subject to market risk,” is quite clear: “mutual fund money is invested in the stock market and mutual fund investments are subject to market risk.”

Therefore, the profit or loss realized from mutual fund investments is related to the profit or loss realized from stock market investments.

Before investing, please read all offer documents related to the mutual fund scheme carefully.”

Which translates to: Before investing in mutual funds, please read all documents related to this mutual fund offer.

Now the question is: which documents pertaining to mutual funds should we read, and why is it imperative that we do so?

Therefore, in today’s Mutual Funds investment series topic, we will discuss what these documents are and where we can find them.

What are the documents associated with the mutual fund offer?

MUTUAL FUND INVESTMENT DOCUMENTS

Scheme related documents in mutual fund offer mainly include the following documents,

These are the four major documents – known as OFFER DOCUMENTS and OD for short – that you must read carefully before investing in mutual funds.

Let us discuss these four in greater detail.

SCHEME INFORMATION DOCUMENT (SID)

Scheme Information Document (SID), also known as Scheme Information Document, is the most important document, a lengthy document that is generally available on the offer page of the mutual fund website.

Like – If you wish to view the SID of any SBI mutual fund scheme, you can obtain both the SID and KIM by visiting the SBI website via the link provided below and selecting the FUND TYPE and SCHEME TYPE of the mutual fund in PDF format. It will also be downloaded, and the entire document can be read.

Similarly, you can download and read both SID and KIM by SEARCH on the website of other mutual fund company.

Documents in Mutual funds
Documents in Mutual funds

Important SID-related facts

By reading the SID, we get to know all these things, like –

Highlights of the Scheme – Objective of the Mutual Fund offer, Risk Factors,

Due Diligence Certificate – SEBI’s recognition of the offer, and other legal information and validity,

Information about the Scheme – Fund manager and team information and their experience,

Units and Offer – Information about units of mutual funds

On Going Offer Details – Past Performance,

Fees and Expenses – Fees, different charges of the fund,

Rights of Unit holders – Information about the rights and limits of unit holders,

Penalties – Information about any kind of fine or extra fee,

Pending Litigation – Information about legal claims and lawsuits,

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The above-mentioned website of the mutual fund scheme also provides access to these documents.

Statement of Additional Information, or SAI for short, contains all legal and general information regarding the Mutual Fund and its formation and constitution.

And this is the Statement of Additional Information, which is the legal portion of the SID (SAI).

KEY INFORMATION MEMORANDUM (KIM)

Key Information Memorandum, which is called KIM in short, is one of the most important documents for an investor, which he must read before investing in mutual funds.

This document can also be found on the website of the mutual fund offering.

Key features of KIM

  • INFORMATION COMMON TO ALL EQUITY SCHEMES
  • PRODUCT LABELING
  • SCHEME SPECIFIC RISK FACTORS RISK CONTROL
  • INVESTMENT STRATEGY & COMPARISON WITH THE EXISTING SCHEMES
  • AUM & FOLIO
  • SCHEMES PORTFOLIO HOLDING
  • GENERAL INFORMATION AND GUIDELINES (NOTES)
  • APPLICATION FORMS
  • NRIS DECLARATION
  • DECLARATION OF ULTIMATE BENEFICIAL OWNERSHIP
  • SIP ENROLMENT FORM
  • ONE TIME DEBIT MANDATE FORM
  • TRANSACTION SLIP
  • KYC FORMS

FACT SHEETS

Fact sheets are documents that contain all types of data related to mutual funds, as well as an analysis of the fund. Various facts and information about mutual funds are presented using simple charts and graphs.

CLOSING Note:

In the end, it is said that it is better to be late than never, so you should read the documents related to mutual funds prior to investing so that they can help you achieve your financial objectives.

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