All mutual fund advertisements require investors to read fund offer documents before investing. The main aim of offer and scheme related documents is to keep investors informed about the mutual fund scheme in all aspects. Every investment needs to be an informed investment and such documents, if read, give a push to the much-needed transparency.
What is a SID?
Scheme Information Document is one of the many fund offer documents and has almost all the information about a mutual fund scheme; details like what are minimum subscription amounts, exit and entry loads, SIP details, fund managers and their experience, risk level, the objective of the scheme etc. While the format of a SID may differ from one fund house to another, the general layout of the content is the same. Here we will look at the different sections of SID.
Where can investors find the SID?
SIDs are easily available on AMC websites or any investment platform you pick. On Groww, a link to the SID is present at the bottom of every fund’s page.
What does an SID have?
SIDs go on for a little more than 100 pages, so it is essential to have an idea of what to expect from this document.
Riskometer and AMC Information: Even before the table of contents and the SID begins, the first page of the SID almost always has the riskometer and some information about the AMC as well.
It is supposed to tell investors transparently how much risk the fund carries. Equity funds generally have a higher risk than other fund categories.
AMC-related information: Information such as the Name of Mutual Fund, Name of Asset Management Company, Name of Trustee Company, Addresses, Website of the entities is given. Such information is mentioned in more detail in the SAI.
Table of Contents: This will give you a quick snapshot of what you should look for in the upcoming pages.
Here are the seven primary sections in a SID:
- Highlights and Summary
- Information about the scheme
- Units and Offer
- Fees and Expenses
- Rights of Unitholders
- Penalties and Pending Litigation
Let’s briefly discuss what all of these sections entail.
The scheme information document begins with the different risks associated with different aspects of the scheme. For example:
- Risks associated with equity investing, fixed income securities(interest rate risk, credit risk, liquidity risk etc.)
- Risks related to strategies like call, short selling and more
- Risks associated with investing in REITs/InvITs
Hence this section talks about risks associated with different underlying assets the fund is investing in, diverse investment strategies and any other risk that an investor may be exposed to by placing their bets on the scheme.
Information about the scheme
- Asset allocation or how much will be invested in which asset. This is mentioned in great detail.
- Investment strategy and objective
- Category of the fund; equity or debt. If equity, then is it a large-cap fund, mid-cap and so on.
- Details about the Fund Managers – Names of fund managers, their experience and other fund schemes they manage.
- Fund performance and top 10 holdings – The SID is usually updated in regular intervals with this information. You will not find this information when the fund is going for its new fund offer (NFO)
Units and Offer
This section has details about how you can access the scheme. Here are a few examples of details that you may see in this section:
- Different available plans: Direct or Regular Plan
- Options: If there are the growth and regular option for the scheme
- Eligibility to invest in the fund
- Minimum amount requirements to invest/redeem
- Entry and exit load
- Details regarding SIP/STP/SWP option if available
- Switching Options
- Call and SMS facilities if any to get information about your investment
- Details on the consolidated account statement
- Disclosure of NAV
Fees and Expenses
This section will give you a detailed break up of all the applicable charges.
In expense ratio, there are a couple of charges that are subsumed into one rate. For instance: Investment Management and Advisory, Trustee fees, Audit fees and any other fees are subsumed. This section will again talk about the entry and exit load applicable if any.
Other Mutual Fund Offer Documents
Apart from the SID, there are two other mutual fund offer documents released for a scheme.
- Key Information Memorandum (KIM)
- Statement of Additional Information
Key Information Document (KIM)
KIM works more like a concise form of SID. KIM has all the essential information about a scheme in a shorter format as SIDs can go on for a couple of pages. KIMs are generally attached with the application form of a mutual fund scheme.
Statement of Additional Information
Another mutual fund offer document is the statement of additional information. This document has information on a larger note and not specifically about the scheme. It has, like the name suggests, ‘additional information’. Information like names of key persons of the asset management company, registrars, bankers, custodian legal counsel and auditors are mentioned. It has details on the asset management company (AMC) itself, sponsors and trustees. Financial and legal matters are also mentioned.