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Things you must read in the offer documents

Nikhil Desai
/ Categories: Mindshare, Mutual Fund
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Offer document which is the core document for mutual fund investment is ignored by investors as they find it difficult to understand. But there are some must read aspects into the offer document which investor should look into before investing into the scheme. Lets just have a look at those must read things of the offer document.

Asset Allocation

This section of the offer document defines the particulars of asset allocation of the scheme. In this section specifies how the fund will allocate the its investment across the sectors and asset classes. The information of minimum and maximum exposure to the specific sector will be useful for investors to evaluate the concentration of the portfolio. So investor must read the asset allocation section of the offer documents

Investment Strategy

This section explains the strategy or approach which is been used by the mutual fund scheme while selecting the instruments across various asset classes. The section determines the selection criteria of the portfolio holdings in the future course of action.


This section gives an insight about the benchmark which is been followed by the scheme. Benchmark is an important aspect as the constituents of the fund and the sectoral weightage among them is structured as per the benchmark usually. So it is considered as the best tool to gauge the performance of the scheme.

Risk Factors

This section explains the risks involved with the investment. The disclosure includes the briefing of liquidity Risk, Default Risk, Settlement Risk, Interest Rate Risk, Re-investment risk, Economic Risk, Currency Risk, Political Risk involved in the investment in the particular scheme if any.

Past performance

Past performance section mentions the performance of the scheme that is returns over the period of time offered by the scheme. This is the primary guide for investors to evaluate the capabilities of the fund and the fund managers.


The mutual fund returns are directly related to the expenses it incurs. So its important for the investors to be aware of the expenses which scheme incurs over a period of time and should look into the expense ratio of the fund.

Investor grievances

Every fund is expected to disclose the status of investor grievances in the Statement of Additional Information. The mutual fund houses has to disclose the number of queries and complaints received & solved. This information indicates the proactiveness and responsiveness of a fund house towards investor grievances.

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