Understanding Mutual Fund Factsheets
A factsheet is a short periodic summary of each scheme: what it holds, how it has performed and how risky it is rated. This lesson explains the main figures for equity and debt schemes, the riskometer and the Potential Risk Class.
What a factsheet is
A factsheet is a short document, usually monthly, in which a fund house summarises each of its schemes. It shows the portfolio (largest holdings and sector split), assets under management, NAV, past performance against the benchmark, risk measures and the riskometer.
It is a snapshot. The portfolio is shown as it stood on one date, and the performance shown is past performance. Holdings change, and past performance may or may not be sustained in future.
Reading an equity scheme
The combined weight of the ten largest holdings shows how concentrated the portfolio is: the higher it is, the more a few holdings drive the result. No standard cut-off marks a portfolio as concentrated; the figure is read against similar schemes.
Sector allocation can be set beside the benchmark's sector weights to see where the scheme differs. Equity factsheets often also show valuation ratios such as price-to-earnings (P/E) and price-to-book (P/B), and risk measures such as standard deviation, beta and the Sharpe ratio; items beyond those SEBI prescribes vary by fund house.
Reading a debt scheme
A debt factsheet shows average maturity, duration, yield to maturity and credit quality. Modified duration indicates how sensitive the NAV is to a change in interest rates: the higher it is, the more the NAV moves when rates change.
Debt schemes also show a Potential Risk Class. Interest-rate risk is graded Class I (Macaulay duration up to 1 year), Class II (up to 3 years) or Class III (any duration). Credit risk is graded Class A, B or C by credit risk value, with A the highest credit quality. That gives nine cells, and a scheme may not move to a riskier cell without treating the move as a change in a fundamental attribute.
The riskometer
Every scheme carries a riskometer with six levels: Low, Low to Moderate, Moderate, Moderately High, High and Very High. It is evaluated every month and disclosed within 10 days of month-end, and it accompanies performance disclosures.
The level on a factsheet is the one evaluated for that month.
Rules at a glance
Two labels on a debt factsheet (illustrative)
A debt scheme's factsheet shows a Potential Risk Class of interest-rate risk Class II and credit risk Class B, and a riskometer at Moderate.
Class II means the scheme keeps its Macaulay duration up to 3 years. Class B is the middle of the three credit classes. The scheme cannot move to a riskier cell without treating that as a change in a fundamental attribute. The riskometer level is the one evaluated for that month.
Three readings from a factsheet (illustrative)
- Assumed figures, for arithmetic only. An equity scheme's ten largest holdings weigh 9%, 8%, 7%, 6%, 5%, 5%, 4%, 4%, 3% and 3%.
- Top-10 weight = 9 + 8 + 7 + 6 + 5 + 5 + 4 + 4 + 3 + 3 = 54%. All the other holdings together make up 100% − 54% = 46%.
- The scheme holds 28% in banks against 22% in its benchmark: 28 − 22 = 6 percentage points overweight. It holds 8% in information technology against 13%: 13 − 8 = 5 percentage points underweight.
- A debt scheme shows a modified duration of 4. As a rough reading, a rise of 0.5 percentage point in interest rates suggests a fall of about 4 × 0.5 = 2% in NAV, other things being equal.
Result. The top-10 weight is 54%; the scheme is 6 percentage points overweight in banks and 5 underweight in information technology; and a modified duration of 4 suggests a move of about 2% in NAV for a 0.5 percentage point change in rates.
Key points
- A factsheet, usually monthly, summarises a scheme's portfolio, assets, NAV, past performance, risk measures and riskometer.
- The top-10 holdings weight shows concentration and is read against similar schemes; there is no standard cut-off.
- The riskometer has six levels, is evaluated monthly and is disclosed within 10 days of month-end.
- The Potential Risk Class grades a debt scheme on interest-rate risk (Class I, II, III) and credit risk (Class A, B, C): nine cells.
Common misunderstandings
- A factsheet is not a live view: it shows the portfolio on one date, and holdings change.
- Yield to maturity on a debt factsheet is not a promised return: it describes the portfolio on that date.
- Past SIP or lump-sum returns in a factsheet are not projections: they describe the past only.
Questions people ask
Which factsheet figure shows a debt scheme's sensitivity to interest rates?
Modified duration. The Potential Risk Class uses a related figure, Macaulay duration, to grade interest-rate risk.
Is there a top-10 weight above which a scheme counts as concentrated?
No. There is no standard cut-off; the figure is read against similar schemes.
How often is the riskometer reviewed?
Every month, with disclosure within 10 days of month-end.
What this lesson relies on
- SEBI Master Circular for Mutual Funds, 20 March 2026 — riskometer, Potential Risk Class and portfolio disclosure
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.