- SEBI-registered mutual funds are required to publish a factsheet every month and disclose the scheme’s portfolio within 10 days of the month’s close.
- The riskometer has six standard levels — Low, Low to Moderate, Moderate, Moderately High, High and Very High — and AMCs must re-evaluate and disclose it every month.
- From April 1, 2026, under the SEBI (Mutual Funds) Regulations, 2026, the old all-inclusive Total Expense Ratio (TER) has been split into a Base Expense Ratio (BER), brokerage/transaction costs, and statutory levies (GST, STT, stamp duty) disclosed separately.
- Every equity/hybrid scheme must be benchmarked against a Total Return Index (TRI), not just a price index, so returns comparisons reflect dividends reinvested.
- A factsheet is a snapshot, not a guarantee — past performance and current ratios do not guarantee future returns.
Most investors glance at a mutual fund factsheet, look at the returns column, and stop there. That’s a mistake — the returns number is the least useful piece of information on the page if you don’t know what’s driving it. A factsheet actually tells you the fund’s cost, its risk profile, how concentrated its bets are, and whether it’s beating a fair benchmark, all in a single page. This guide walks through every section of a typical factsheet in the order a professional would read it, with a worked illustrative example, so you can evaluate any scheme — equity, debt or hybrid — in under ten minutes.
About This Guide
Deepak Gokul, Chartered Wealth Manager (CWM®), NISM Certified Mutual Fund Distributor and NISM-Series-XVII: Retirement Adviser Certified, has spent years helping first-time and experienced investors in Chennai and beyond translate factsheet jargon into decisions they actually understand. His firm, Deepak Wealth Framework Pvt Ltd, is an AMFI Registered Mutual Fund Distributor (ARN-328771), authorised to recommend and facilitate mutual fund investments based on a client’s goals. The framework below is the same one used in client review meetings at the firm.
1. Start With the Basics: Scheme Name, Category and Objective
Every factsheet opens with the scheme name, its SEBI category (Large Cap, Flexi Cap, Corporate Bond, Balanced Advantage, and so on) and a one-line investment objective. Read this before anything else — it tells you what the fund is even trying to do. A “Large Cap Fund” and a “Small Cap Fund” can both show great one-year returns, but they carry very different risk, and comparing them head-to-head on returns alone is comparing apples to volatile oranges.
Why the category matters more than the fund name
SEBI’s scheme categorisation rules define exactly what each category can invest in — a Large Cap fund, for instance, must hold a minimum proportion in the top-100 companies by market capitalisation. This means two “Large Cap” funds from different AMCs are broadly comparable, but a “Large Cap” fund and a “Flexi Cap” fund are not, even if their names sound similar.
2. NAV and AUM: What They Tell You (and What They Don’t)
The Net Asset Value (NAV) is simply the price of one unit of the fund on that day. A “low” NAV does not mean a fund is cheap or undervalued — unlike a stock price, NAV has no relationship to future returns. Two funds that invest identically will grow your money by the same percentage whether their NAV is ₹15 or ₹1,500.
Assets Under Management (AUM) shows the total money the scheme manages. A large AUM can signal investor trust and, in debt funds, more room to negotiate better instrument pricing — but in small-cap and mid-cap equity funds, a very large AUM can make it harder for the fund manager to enter and exit positions without moving prices, which is worth watching over time rather than reacting to in a single month.
3. Understanding the Expense Ratio (What Changed From April 2026)
The expense ratio is what the fund deducts from your returns every year to cover management, distribution and operating costs — it’s taken out of the NAV daily, so you never see it as a separate bill, but you feel it in your returns.
Until recently, this was shown as a single number called the Total Expense Ratio (TER), bundling the fund manager’s fee, brokerage, and statutory charges like GST and STT together. As per the SEBI (Mutual Funds) Regulations, 2026, effective 1 April 2026, factsheets now break this into three separate components:
| Component | What it covers |
|---|---|
| Base Expense Ratio (BER) | The core fee the AMC charges for managing the fund — this is the number most comparable across schemes. |
| Brokerage & transaction costs | Annualised, cumulative daily-average trading cost incurred on the scheme’s trades, reset monthly. |
| Statutory levies | GST, STT, stamp duty and exchange/SEBI charges, now shown on actuals rather than folded into a single cap. |
The takeaway for you as an investor: don’t just eyeball “expense ratio” as one figure any more — check whether you’re comparing BER to BER, or an old-style all-in TER to a new-style BER, since they are not the same base. Direct plans will still show a meaningfully lower BER than Regular plans of the same scheme, because Regular plans include distributor commission.
4. Benchmark: Is the Fund Actually Beating a Fair Comparison?
Every scheme is compared against a benchmark index, and since SEBI’s disclosure norms, this must be a Total Return Index (TRI) — a version of the index that assumes dividends are reinvested, which is a fairer, tougher comparison than a plain price index. A fund that “beats the Sensex” but is actually lagging the Sensex TRI isn’t really outperforming; it’s benefiting from an easier yardstick. Always check that the factsheet is showing TRI, not just the index name.
5. The Riskometer: Reading the Six Levels
SEBI mandates a standardised “riskometer” on every factsheet, marketing material and scheme document, with six levels: Low, Low to Moderate, Moderate, Moderately High, High, and Very High. AMCs must recompute and disclose this every month based on the scheme’s actual current portfolio, not just its category label — so two funds in the same category can, in principle, sit at different risk levels if their holdings differ.
A “Very High” rating is common for equity funds and is not, by itself, a red flag — it reflects normal equity market volatility. What matters is whether that risk level matches your own goal and time horizon, not whether you can find a “Low” risk equity fund (you generally can’t, and shouldn’t expect to).
6. Portfolio Holdings and Sector Allocation
The holdings table shows the top stocks or bonds the scheme owns, usually with each position’s percentage weight. Two things to actually check here: concentration (how much of the fund sits in its top 5-10 holdings) and sector spread (whether the fund is quietly overweight in one sector, like banking or IT). A fund whose factsheet shows 45% of assets in its top five stocks is running a meaningfully more concentrated, higher-conviction — and higher-risk — strategy than one spread across 60-70 names, even if both are labelled “Flexi Cap.”
7. Risk Ratios: Standard Deviation, Beta, Sharpe Ratio and Portfolio Turnover
Most equity factsheets carry a small ratios table. Here’s what each one is actually telling you:
Standard deviation
Measures how much the fund’s monthly returns swing up and down. A higher standard deviation means a bumpier ride to get to the same destination — useful for comparing volatility between two funds in the same category.
Beta
Shows how the fund moves relative to its benchmark. A beta above 1 means the fund tends to move more sharply than the benchmark in both directions; below 1 means it moves less sharply.
Sharpe ratio
Return earned per unit of risk taken, after subtracting the risk-free rate. Between two funds with similar returns, the one with the higher Sharpe ratio delivered those returns more efficiently, with less risk per unit of return.
Portfolio turnover ratio
How much of the portfolio was bought and sold over the year. A very high turnover ratio can mean higher transaction costs (now visible separately under the new expense structure above) and a more actively-trading style, which isn’t automatically good or bad, but is worth knowing.
8. Exit Load and Lock-in
The exit load is a small charge (commonly around 1%, but always check the specific scheme’s factsheet) deducted if you redeem before a defined period, usually 12 months for open-ended equity funds — this exists to discourage short-term churn, not to penalise long-term investors. ELSS (tax-saving) funds instead carry a mandatory 3-year lock-in with no exit option before that, which is a different mechanism from an exit load. Always confirm the exact load and lock-in on the specific scheme’s factsheet rather than assuming it matches a similar-sounding fund.
9. Fund Manager Details and Tenure
The factsheet lists the current fund manager(s) and, usually, how long they’ve managed that specific scheme. A long, stable tenure through at least one full market cycle (a rally and a correction) tells you more about consistency than a short tenure during only a rising market. If a fund has changed managers recently, it’s worth checking whether the investment process is manager-dependent or team/process-driven before assuming past performance will continue.
Worked Example: Reading a Factsheet Line by Line
The numbers below are entirely illustrative, for teaching purposes only, and do not represent any real scheme.
“XYZ Flexi Cap Fund” (illustrative) — Category: Flexi Cap Equity. NAV: ₹58.40 (Regular, Growth). AUM: ₹12,400 crore. Base Expense Ratio: 0.62% (Direct) / 1.85% (Regular). Riskometer: Very High. Benchmark: Nifty 500 TRI. Standard deviation: 13.2%. Beta: 0.94. Sharpe ratio: 0.71. Portfolio turnover: 38%. Exit load: 1% if redeemed within 12 months. Top holding concentration (top 5 stocks): 28%.
Reading this together: it’s a diversified equity fund (28% in top 5 holdings is not overly concentrated), priced meaningfully cheaper in Direct than Regular plan, moving slightly less sharply than its benchmark (beta 0.94), earning a reasonable Sharpe ratio versus peers, with moderate turnover and a standard 12-month exit load — appropriate for a long-term equity goal, not a short-term parking spot, and its “Very High” riskometer is normal for this category rather than a warning sign on its own.
A Simple Checklist to Use Every Time
Before you invest, or the next time your existing fund’s factsheet lands in your inbox, run through this order: (1) category and objective, (2) expense ratio — BER for Direct vs Regular, (3) riskometer level against your own risk appetite, (4) benchmark and whether it’s a TRI, (5) top holdings and concentration, (6) Sharpe ratio versus category peers, (7) exit load and lock-in, (8) fund manager tenure. Only after all of that does the returns number mean something.
Frequently Asked Questions
What is a mutual fund factsheet?
A mutual fund factsheet is a one-page monthly document published by the AMC summarising a scheme’s NAV, AUM, expense ratio, riskometer rating, benchmark, top holdings, key ratios and historical performance, giving investors a quick snapshot of the fund.
How often is a mutual fund factsheet updated?
Factsheets are published monthly. Portfolio holdings must be disclosed within 10 days of each month’s close, and the riskometer is re-evaluated and disclosed every month based on the scheme’s current portfolio.
What is the difference between NAV and AUM?
NAV is the price of one unit of the fund on a given day and has no bearing on whether a fund is “cheap.” AUM is the total value of all the money the scheme manages. A low NAV does not mean better value, and a high AUM does not automatically mean a better fund.
What does the SEBI riskometer show?
The riskometer is a standardised six-level scale — Low, Low to Moderate, Moderate, Moderately High, High and Very High — showing a scheme’s risk level based on its actual current portfolio. It’s reviewed monthly and must be checked against your own risk appetite and time horizon, not treated as a warning label on its own.
What changed in mutual fund expense ratios from 2026?
From 1 April 2026, under the SEBI (Mutual Funds) Regulations, 2026, the earlier single Total Expense Ratio (TER) figure was unbundled into a Base Expense Ratio (BER), brokerage/transaction costs, and statutory levies (GST, STT, stamp duty), each shown separately, so investors can see what portion of the cost is the AMC’s actual fee.
What is a good Sharpe ratio for a mutual fund?
There’s no single universal “good” number — a Sharpe ratio is only meaningful when compared against other funds in the same category over the same period. A higher Sharpe ratio than category peers, over a consistent period, generally indicates better risk-adjusted returns.
What is exit load and when does it apply?
Exit load is a charge deducted if you redeem units before a scheme’s specified minimum holding period, commonly 12 months for open-ended equity funds, and it’s disclosed on every factsheet. ELSS tax-saving funds instead have a fixed 3-year lock-in during which redemption isn’t allowed at all.
Should I judge a fund only by comparing it to its benchmark?
No — the benchmark (ideally a TRI) is one input, not the whole picture. Combine it with the riskometer, expense ratio, Sharpe ratio, portfolio concentration and your own goal and time horizon before deciding whether a fund is right for you.
Not sure how a specific fund’s factsheet stacks up against your goals? Talk to Deepak Wealth Framework for a no-pressure review — call +91 91763 40301 or message us on Google Business Profile.