Cactus Personal Finance

Hello everyone! Today I’m going to talk about something important when it comes to investing. ETF often come with paperwork and it’s worth taking the time to fully understand and read carefully the relevant documents.

If you’re completely new to investing, it can be confusing reading documents and navigating through financial information. In this paper I’ll try to list and explain the most common words found in factsheet documents. Factsheet is simply a summary of and ETF core financial information. It’s like a passport for an individual.

As per usual this is not financial advice, if you’re unsure about anything seek professional advice from a regulated financial advisor.

Now let’s debunk the most common information found in ETF factsheet.

Total assets or fund size: it means how much money have been collected so far. In general the higher the better.

Total expense ratio (TER) or ongoing charges figure (OFC): Those are annual fees shown in percentage. If you invest £10,000 and the ETF facthseets shows 0.15% fees, it means your cash account will be debited by £150 once a year.

Accumulation or Income: Those are dividend related. Accumulation means you will not received any dividends into your uninvested cash account. Instead the dividends is re-invested automatically into the fund and you don’t have anything to do.

Investment method (physical or synthetical) : Physical method means the investment managers bought all the shares reflected into the ETF.

Inception date: fund’s start date. Easy.

Holdings: it shows how many companies are represented within the ETF. If the holdings are 300, it means that your money is actually invested in 300 different companies.

NAV or net asset value: it’s simply the share price of the ETF.

Dealing frequency: it could be daily, weekly or monthly. For ETF daily frequency is the most common one. It tells us how quickly you can invest and take your money back.

Volatilily: it’s a word widely used in finance because it defines by how much the price goes up and down. In other words it says how much you can earn or loose.

GBP hedged: it means that you don’t have to worry about investing in foreign coutries. Usually ETF fees are slightly higher when currency risk is managed by the investment manager.

That’s all for today, I hope you enjoy reading this article. If you think I didn’t mention something important, feel free to drop me a line to discuss further. Cheers!