Mutual Funds · advanced
Reading a Scheme Before You Invest
Where a scheme's facts are found and what they mean: offer documents and factsheets, category and benchmark, risk labels, costs, growth and IDCW options, goal arithmetic, allocation terms, and how past performance must be shown.
- 01Where a Scheme's Facts Are Found: SID, KIM, FactsheetA scheme's facts sit in a small set of documents. This lesson explains what the SID, SAI, KIM, portfolio disclosure and factsheet each contain, how they are kept up to date, and what none of them can tell a reader.
- 02The Category Label and the BenchmarkEvery scheme carries a category label from SEBI's categorisation and a benchmark to be compared with. This lesson explains what the label fixes, how company size is defined, and how Tier 1, Tier 2 and Total Return Index benchmarks work.
- 03Risk Labels: the Riskometer and the Potential Risk ClassTwo standard labels describe a scheme's risk: the riskometer, shown by every scheme, and the Potential Risk Class matrix, shown by debt schemes. This lesson explains how each is set, how they differ, and what neither can say.
- 04Costs: Expense Ratio, Direct and Regular Plans, Exit LoadA scheme's running costs are charged inside its NAV as an expense ratio. This lesson explains the base and total expense ratios, how the direct and regular plans of a scheme differ, how an exit load works, and how a small cost difference compounds.
- 05Growth and IDCW Options: How Each WorksA scheme usually offers a growth option and an IDCW option. This lesson explains what happens to the scheme's earnings under each, why an IDCW payout lowers the NAV, and how each option is taxed (rates as of October 2026).
- 06Goal Arithmetic: an IllustrationA financial goal can be turned into a number with simple arithmetic. This lesson shows how an assumed inflation rate gives a future cost, how the same arithmetic run backwards gives an amount needed today, and why every result is an illustration.
- 07Asset Allocation, Diversification and Rebalancing: What the Words MeanAsset allocation, diversification and rebalancing are three terms used to describe how a portfolio is built. This lesson defines each, shows how portfolio overlap is measured, and sets out what a switch between schemes involves. It defines terms and does not suggest any mix.
- 08Past Performance: What Must Be Shown, and the Standard WarningRules fix how a scheme's past performance is shown, so that schemes can be compared on the same footing. This lesson covers the required figures, the benchmarks shown beside them, what advertisements may not contain, and why a past return says nothing certain about the future.