When considering an investment in funds, the number of documents involved can feel overwhelming. Each document plays a crucial role in providing the information you need to make an informed decision. From the fund's objectives to the associated risks and fees, understanding the content of these documents is key to a successful investment journey.
In this guide, we break down the essential documents you should review before investing in an investment fund.
Key Information Document (KID)
A strictly standardized max. 3 pages document with very similar content for each investment fund, helping to easily compare different funds.
Product Description: briefly describes the investment fund, recommended holding period, objectives of the fund, and how they will be achieved;
Risk and Reward Profile: Summary Risk Indicator and Performance Scenarios;
Costs: One-off, Ongoing and Additional costs.
Fund Rules / Articles of Association
The Document is approved by the Supervisory Authority (Central Bank). This ensures full compliance with legal and regulatory requirements, safeguarding investor interests.
Detailed Management Structure and Procedures;
Shareholders' / Participants' Rights and Obligations;
Capital Structure and Conditions for Changes;
Conditions for Liquidation and Reorganization;
Comprehensive Risk Management Mechanisms;
Conflict Resolution Mechanisms.
Prospectus
The prospectus is a detailed document providing extensive information about an investment fund, as required by legislation. Provides investors a deep understanding of the fund, helping them make informed investment decisions.
Fund Objectives and Strategies: goals and how they will be achieved, including the types of assets invested in and investment approaches used;
Thorough explanation of the Risks;
Fees and Expenses: management fees, administrative fees, and other expenses.
Management Information: Team and their experience;
Operational Details: Buying and Selling fund shares.
Fund Factsheet
Fund Factsheet is a concise, investor-friendly document that provides key information about an investment fund's performance, holdings, and other important characteristics. Serves as a marketing tool and a quick reference for investors to assess and compare funds.
Focuses on recent performance and current fund characteristics, holdings;
Not strictly regulated in terms of content or format, may vary between different fund providers;
Emphasizes past performance and market commentary;
May include promotional language and is often more visually engaging.
Investment Agreement
This document lays out the contractual legal framework governing your investment in the fund. It comprehensively defines the rights and responsibilities of both the investor and the fund management.
Conditions for investing and withdrawing funds, any lock-in periods, transferring ownership;
Mechanisms for dispute resolution, outlining how any disagreements or claims will be handled;
Serves as a binding agreement that ensures both parties are aware of their obligations and protections.
Annual and Semi-Annual Reports
These reports provide information on the fund's performance over a specific period, asset composition, financial statements, and other important data. They enable investors to monitor the fund's efficiency and compare it with other funds.
ESG Reports
If the fund focuses on ESG (Environmental, Social, and Governance) criteria, Sustainability and Corporate Social Responsibility Reports provide information about the fund's commitments in these areas.
If the fund focuses on ESG (Environmental, Social, and Governance) criteria, Sustainability a
nd Corporate Social Responsibility Reports provide information about the fund's commitments in these areas.e areas.