Investing in mutual funds can be a great way to grow your wealth over time. However, it’s important to understand the risks and benefits of each mutual fund scheme before investing your hard-earned money. One of the most important documents that can help you make an informed investment decision is the Scheme Information Document (SID). In this article, we will discuss what SID is, where investors can find it, and what information it contains.
What is Scheme Information Document (SID)?
Scheme Information Document (SID) is a document that provides investors with all the necessary information about a mutual fund scheme. It includes details such as minimum subscription amounts, exit and entry loads, SIP details, fund managers and their experience, risk level, the scheme’s objective, etc. SID is one of the many fund offer documents and has almost all the information about a mutual fund scheme.
Where can investors find the SID?
SIDs are easily available on Asset Management Company (AMC) websites or any investment platform you pick. For example, on our website, you can find the SID under the “Scheme Documents” section of each mutual fund scheme.
What is contained in a scheme information document?
An SID contains all the necessary information about a mutual fund scheme that an investor should know before investing. Here are some of the key points that are covered in an SID:
- Investment objective
- Asset allocation or how much will be invested in which asset
- Investment strategy and objective
- Category of the fund; equity or debt
- Minimum subscription amounts
- Exit and entry loads
- SIP details
- Fund managers and their experience
- Risk level
Why should you read the SID?
The Scheme Information Document (SID) is a vital resource for mutual fund research because:
- It elucidates attributes like the scheme objective and asset allocation pattern, aiding in a better comprehension of the scheme's intent and investment strategy.
- Risk factors can be scrutinised to ascertain whether the scheme aligns with your risk appetite.
- Details regarding fund managers enable investors to gain insights into the experience and capabilities of those overseeing the scheme.
- Information on loads, fees, and expense ratios offers a transparent overview of the investment costs involved.
- Past performance and benchmark details serve as tools for mutual fund analysis (though past performance doesn't guarantee future success).
How to read a scheme information document of mutual fund?
Reading an SID can be overwhelming due to its length and technical jargon. Here are some tips on how to read an SID effectively:
- Start with the introduction section which explains the aim behind launching a particular scheme.
- Look for the investment objective which explains how the fund plans to achieve its objective.
- Check out the asset allocation section which mentions how much will be invested in which asset.
- Understand the investment strategy and objective.
- Look for fees and expenses such as exit loads, entry loads, etc.
- Check out the risk level associated with different aspects of the scheme.
Fees and expenses
Fees and expenses are an important aspect of mutual funds that investors should be aware of before investing. Here are some fees and expenses that are mentioned in an SID:
- Entry load: The fee charged when an investor purchases units of a mutual fund
- Exit load: The fee charged when an investor sells units of a mutual fund
- Expense ratio: The total expense incurred by an AMC to manage a mutual fund scheme
Other mutual fund offer documents
There are two other mutual fund offer documents, details below:
Offer Document |
Description |
Key Information Document (KIM) |
KIM serves as a condensed version of the Scheme Information Document (SID), providing essential scheme details in a shorter format, typically attached with the application form. |
Statement of Additional Information |
The Statement of Additional Information (SAI) offers comprehensive information beyond the scheme specifics. It includes details about the asset management company (AMC), key personnel, legal matters, financial aspects, and the role of sponsors and trustees. |
Conclusion
In conclusion, the SID is the most important document for investors to read when choosing a mutual fund scheme. It includes every detail pertinent to the scheme, and gives you a fair idea of the risks as well as benefits associated with investing in any mutual fund.
