Finding Mutual Fund Managers: Where Do They Invest?

Mutual funds are a practical and cost-efficient way to build a diversified portfolio of stocks, bonds, or short-term investments. They are managed by professional fund managers who are responsible for implementing a fund's investing strategy and managing its portfolio trading activities. While mutual fund managers are paid a fee for their work, which is a percentage of the fund's average assets under management (AUM), their compensation is often difficult to discern due to vague disclosures and the involvement of advisory agencies.

To find out where mutual fund managers are investing, investors can review the fund's prospectus, which outlines its investment strategy, objectives, and types of securities it invests in. Additionally, fund managers are required to release monthly 'Fact Sheets' detailing the latest portfolio allocation, NAV, fund managers, and investment performance. Investors can also utilize tools such as Consolidated Account Statements (CAS) and online portfolio trackers to monitor their mutual fund investments and ensure they align with their risk appetite and financial objectives.

Consolidated Account Statement (CAS)

A Consolidated Account Statement (CAS) is a single/combined account statement that shows the details of financial transactions made by an investor during a month across all Mutual Funds. It is issued for folios/accounts where a financial transaction has taken place during a month and where unit holders are identical, identified by Income Tax Permanent Account (PAN).

The CAS is generated on a monthly basis and is provided by depositories such as NSDL or CDSL. It is sent to the investors by the Depositories, providing the details of financial transactions in both mutual fund folios and depository accounts. The CAS for a particular month is sent by the 10th of the following month.

The CAS includes financial transactions such as the purchase of units, redemption including maturity payments, switches, systematic transactions, dividend payments or reinvestments, merger of schemes, and allotment of bonus units. It does not include non-financial transactions such as a change of address, bank details, or nomination registration.

The CAS can be obtained either by post or by email. To receive it by email, investors can subscribe to e-CAS services on the NSDL-CAS website and will then receive the CAS statement on a monthly basis. It can also be generated whenever needed by navigating to the "Track your CAS" section on the NSDL-CAS website and providing the CAS ID, PAN, and email address.

The CAMS/KFIN-CAS platform also provides a way to generate a CAS. Investors can visit the CAMS platform and navigate to the "MF Investors" section, where they can select the "CAS - CAMS + KFIN" option and choose between a summary or detailed statement. After entering the desired date and providing an email and password, a copy of the e-CAS will be sent to the registered email address.

The MFCentral platform also allows investors to generate a CAS by visiting their website, logging in or signing up with their PAN and email or phone number, navigating to the "Statements" section, and selecting the type of CAS they want.

AMC Website/Mobile App

Most Asset Management Companies (AMCs) now allow investors to access their accounts online, either through a website or a mobile app. This can be a convenient way to view your account statement and analyse the performance of your mutual fund portfolio.

To access this information, you will first need to create an account on the AMC's website or mobile app. Once you have an account, you can log in and view your account statement. This will allow you to see the details of your mutual fund investments, including the specific funds you have invested in and the performance of those funds over time.

It is worth noting that this method of tracking your investments may be time-consuming if you have invested in mutual fund schemes from multiple AMCs, as you will need to log in to each individual AMC account to access this information. If you have investments with multiple AMCs, you may find it more convenient to use an online portfolio tracker or a consolidated account statement (CAS), which can provide a more centralised view of your investments.

However, logging in to the AMC's website or mobile app can still be a useful way to stay informed about your mutual fund investments and keep track of how your investments are performing over time. This can help you make strategic investment decisions and ensure that your investments are aligned with your financial goals.

Online Portfolio Trackers

• Real-time Information: Portfolio trackers provide up-to-the-minute information on your investments, allowing you to know where you stand and make timely decisions.
• Syncing of Financial Accounts: Most trackers can sync with your existing accounts, making it easy to import data from multiple investment and banking accounts.
• Dashboard and Reporting: Track your financial progress with a user-friendly dashboard that offers reporting functions, charts, and graphs.
• Asset Allocation and Monitoring: Monitor your portfolio's diversification and compare your asset allocation to benchmark indices such as the S&P 500.
• Retirement Planning: Some trackers include a retirement planner that incorporates your 401(k) and IRAs, helping you stay on track with your retirement goals.
• Fee Monitoring: Keep an eye on brokerage and mutual fund fees to save money and maximize your returns.
• Free and Paid Options: Many portfolio trackers offer both free and paid versions, allowing you to choose the level of service that meets your needs.
• Empower (Formerly Personal Capital): This app has over three million users and offers features such as net worth tracking, savings plans, and syncing of various investment and bank accounts.
• SigFig Wealth Management: SigFig offers a free version that tracks your investment accounts in one dashboard and a fee-based version that provides personalized investment plans.
• Sharesight: Monitor the performance of your investments from 60 global stock exchanges. Sharesight offers a free version for up to ten holdings and a paid version with additional reporting features.
• Yahoo Finance: With a simple and easy-to-use design, Yahoo Finance allows you to track your stocks, commodities, bonds, and currencies, providing real-time market information.
• Equitymaster's Portfolio Tracker: This premium online tracker provides "intelligent" tools to analyse your portfolio, including "intelligent" reports and charts, email alerts, and the ability to track individual and collective portfolios.

Mutual Fund Fact Sheet

A mutual fund fact sheet is a basic document that gives an overview of a mutual fund. It is a great starting point for investors to evaluate an investment opportunity. The fact sheet is typically updated monthly and is easy to find on the fund's platform. Here is a breakdown of the key components of a mutual fund fact sheet:

• Fund Name and Type: The fact sheet provides the full name of the fund, its type (e.g., equity, bond, or hybrid), and the fund manager's information, especially important for actively managed funds.
• Performance Data: This section presents the fund's historical performance over various time frames, such as one month, one year, five years, or ten years. The data is often compared against a relevant benchmark index to show how the fund is performing relative to its peers or the broader market.
• Fund Holdings: This part details the composition of the fund's portfolio, including the percentages of different asset classes (e.g., stocks, bonds), sectors (e.g., technology, healthcare), or geographic regions. This information helps investors understand the fund's diversification and risk level.
• Top Holdings: In addition to the overall composition, the fact sheet typically lists the top 10 holdings. This gives investors a sense of the assets that have the most significant impact on the fund's performance and risk profile.
• Risk Profile: The fact sheet includes metrics such as volatility (measured by standard deviation) or other risk assessments to indicate the level of risk associated with investing in the fund. Many fact sheets also have an in-house rating system for risk.
• Fees and Expenses: Information about the fees and expenses associated with the fund is crucial, as high fees can significantly impact overall investment returns.
• Minimum Investment Requirements: The fact sheet specifies the minimum investment amounts required for initial and subsequent investments.
• Dividend Information: For income-focused funds, the fact sheet may include details about dividend yields, payout frequency, and historical dividend distributions.
• Manager Commentary: Some fact sheets include a section where the fund manager provides insights into recent performance, any changes in holdings or strategies, and the outlook based on current market conditions.
• Glossary and Additional Information: Most fact sheets include a glossary of key terms and additional disclosures or caveats related to the information provided.

Fact sheets are typically three to six pages long and are designed to be easily understandable for the average investor. They provide a concise explanation of the benefits and risks associated with a particular mutual fund. It is recommended to review the fact sheet at least once a year to stay informed about any changes in the fund's strategy, performance, and fees.

Investment Advisor

• Understanding Client Profile: A qualified investment advisor will begin by thoroughly understanding their client's investment objectives, risk appetite, financial situation, and long-term goals. This step is essential to tailor the investment strategy accordingly.
• Research and Analysis: Investment advisors have the expertise and tools to conduct in-depth research and analysis of various mutual funds and their managers. They can evaluate the track record, investment style, and performance of different fund managers to identify those aligned with the client's goals.
• Fund Selection: Based on their research, investment advisors can recommend a diverse range of mutual funds that match the client's investment profile. They can explain the investment strategies, fees, and potential risks associated with each fund, ensuring that clients make well-informed decisions.
• Performance Monitoring: Investment advisors regularly monitor the performance of the selected mutual funds and their managers. They keep clients updated on the fund's progress, ensuring that it aligns with the expected returns and risk parameters. If adjustments are required, advisors can provide timely recommendations.
• Fact Sheets and Reports: Investment advisors have access to fact sheets, fund prospectuses, and research reports that provide detailed information about mutual funds. These documents include key details such as fund objectives, manager experience, investment allocation, fees, and historical performance. Advisors can help clients interpret this information to make informed choices.
• Consolidated Account Statements: Investment advisors can help clients obtain and understand Consolidated Account Statements (CAS) from depositories like CDSL or NSDL. These statements provide a comprehensive overview of the client's mutual fund portfolio, including financial transactions across different fund houses and accounts.
• Online Portfolio Trackers: For clients with diverse mutual fund holdings, investment advisors may suggest using online portfolio trackers. These tools allow investors to consolidate information about their mutual fund schemes from multiple fund houses in one place, making it easier to track performance.
• Risk Assessment: Investment advisors can guide clients in understanding the risks associated with different mutual funds. They can explain the volatility, investment strategies, and potential drawbacks of each fund, ensuring that clients are aware of the risks before investing.
• Fee Structure: Investment advisors can help clients navigate the complex world of mutual fund fees, including expense ratios, sales charges, redemption fees, and account fees. Advisors can explain how these fees impact overall returns and help clients identify funds with a fee structure suitable to their investment goals.

By leveraging the knowledge and resources of an investment advisor, individuals can make more informed decisions about mutual fund managers' investments, aligning their choices with their financial objectives and risk tolerance.

Frequently asked questions