How to read fund factsheets

The percentage figure represents the total projected annual income that the fund will pay, calculated on a specific date and with no tax deducted.

Ex-Ante means ‘expected’ and the figure shows the anticipated annual percentage cost to the fund of the buying and selling of its underlying assets.

This represents the total annual fee charged by the fund management company but does not include the transactional costs.

Square Mile is an independent funds research company that ‘rates’ funds, and provides opinion. The ratings are a guide to the conviction that their analysts have in the ability of a fund manager to achieve their outcome objectives over the longer term. The ratings range from AAA, to AA and A for actively managed funds. Rated passive funds are awarded an R for recommended and some younger funds, with shorter track records, are afforded a PP rating, as a ‘Positive Prospect.’

ESG stands for "Environmental, Social and Governance" measurements which can be used to assess how an asset is managed.

The types of factors that can be included in each of the three categories are:

• Environmental - an organisation’s energy use, waste disposal, raw material sourcing, water usage, location of operations and pollution prevention.
• Social – an organisation’s diversity, employee rights, use of agency workers, labour relations and treatment of minorities.
• Governance – this would be illustrated by the composition of the company’s board, for example the diversity of gender, experience, etc., voters’ rights and remuneration policy. This is probably the area that most asset managers have been monitoring as part of their regular work and has been placed into greater focus as a result of recent events, such as the Volkswagen emission scandal and Sports Direct’s governance.

Square Mile has developed an approach to analysing and articulating the various approaches to ESG as part of its research process.

This is another way to assess the approach that a fund takes to ESG factors and stands for The United Nations Principles for Responsible Investment. The system scores funds across bands from E up to A and A+, with A+ scoring 95% or higher on a defined set of variables.

Financial Express is a company that provides independent performance analysis on funds. Based upon their performance analysis they award a Crown Rating of between one and five crowns, where five is the highest score.

The Sharpe Ratio indicates a measure of the return that a fund has generated for the risk that it has taken. Generally a ratio of greater than 1 is considered acceptable to good, a ratio of greater than 2 is very good and a ratio of 3 or more is considered exceptional.

The Sortino Ratio is very similar to a Sharpe Ratio and measures the return for each unit of downside risk within a fund. A Sortino Ratio of greater than 2 is considered to be good.

The maximum drawdown shows in percentage terms, the maximum amount that the fund value has fallen at any one time over rolling twelve month periods. This is another useful risk comparator with other funds.

FE is short for Financial Express which is a company that provides independent performance analysis on funds. Their risk rating scores illustrate the level of risk compared to the FTSE 100 index. A score of 100 indicates the same level of risk as the index.