What is a KID?
KID is short for “Key Information Document” - sometimes also known as a KIID or “Key Investor Information Document” (another similar and unnecessary abbreviation - as if there aren’t enough already!)
The EU requires these documents to be provided by every fund which European investors are able to buy. Regulations are slightly different in the US and the rest of the world, so not all funds provide these gems…yet!
KIDs contain vital information about the fund which you, as an investor, should make yourself familiar with before investing. This information usually includes:
1. A risk rating for the fund
2. A description of the investment policy, outlining what types of securities the fund invests in, giving you clarity on certain things like:
Does it invest in growth companies or look for more income providers?
Does it invest in large, well known companies or smaller, riskier companies?
Which countries does it look to invest in?
How much of the fund is invested in stocks, and how much in bonds or other investments?
3. A summary of how much the fund manager will charge you to invest in the fund
4. Often the fund manager will also provide the fund’s past performance relative to a comparable benchmark
For example if it’s a US Tech fund, the fund manager might compare their returns to what you would have earnt by just buying a NASDAQ 100 ETF (the NASDAQ 100 stock index is a collection of US tech companies)
To summarise - KIDs are a must-read if you’re looking at investing in any funds, to make sure you know what you’re getting yourself into!
Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.
Disclaimer: At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions. While we try our best, we cannot ensure the accuracy of the information we provide.
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