How do you read a fund fact sheet?
A fund fact sheet (often called a Minimum Disclosure Document or MDD) is a concise, standardised summary of an investment fund. It provides a snapshot of the fund's goals, its underlying assets, and the total costs involved.
Because every management company in South Africa must follow strict disclosure rules, these documents offer a reliable way to compare different funds side-by-side.
The core components of the document
While layouts vary by provider, a standard fund fact sheet typically includes these five sections:
- Fund objective: a short description of what the fund tries to achieve (e.g., capital growth, income, or a balance of both).
- Asset allocation: a pie chart showing where the money is invested, such as listed property, equities (stocks), bonds, or cash.
- Performance history: a graph showing how the fund has performed relative to its benchmark over 1, 3, 5, and 10 years.
- Risk profile: a gauge or rating indicating the level of volatility, usually ranging from low to high.
- Fee disclosures: the section detailing the costs that reduce the potential investment return.
Understanding the alphabet soup of fees
Investment fees are often presented as acronyms. Each serves a different purpose in showing how much money is lost to costs.
- TER (Total Expense Ratio): this measures the operational costs of running the fund itself, such as management fees, audit fees, and legal costs. It is the cost of the "engine" of the fund.
- TC (Transaction Costs): these are the costs incurred by the fund manager when buying and selling the underlying assets (like brokerage fees).
- TIC (Total Investment Charge): this is the sum of the TER and the TC. It represents the full cost of the fund itself, excluding any advice or platform fees.
The most important tool: the EAC
The EAC (Effective Annual Cost) is the most comprehensive measure available to an investor. While the TIC covers the costs of the fund, the EAC aims to capture every single cost a user is likely to pay.
- Investment management charges (the TIC)
- Advice charges (if applicable)
- Administration fees (platform costs)
- Other charges (such as guarantees or loyalty bonuses)
The EAC is expressed as an annualised percentage. If a fund has an EAC of 1.5% over 10 years, it means that, on average, the costs will reduce the potential investment returns by 1.5% per year for that decade.
Why fees matter
Small differences in percentages lead to massive differences in final outcomes. Because investment returns compound over years, high fees can erode a significant portion of a retirement nest egg.
A lower cost does not automatically make a fund "better," nor does a high cost guarantee better performance. However, fees are the one aspect of investing that is certain, regardless of whether the market goes up or down.
Terms used on this page
- REIT
- A real estate investment trust — a listed company that owns income-producing property and pays most of its rental profit out to investors as distributions.
- TER (total expense ratio)
- The yearly running cost of a fund — management and operating costs — shown as a percentage of your investment on the fund’s fact sheet.
- TC (transaction costs)
- The costs a fund manager incurs when buying and selling the assets inside the fund, such as brokerage fees.
- TIC (total investment charge)
- The total cost of a fund itself — the Total Expense Ratio (TER) plus the Transaction Costs (TC) — before any advice or platform fees.
- EAC (effective annual cost)
- South Africa’s standard for disclosing what an investment really costs: one comparable yearly percentage, split into fund management, administration, advice and other costs.
Sources
Reviewed July 2026