Reading investment disclosures, fees and performance
Turn an investment document into questions about ownership, risk, cost and access before relying on a sales description.
Before you start
An investment document is most useful when you turn it into questions you can answer: what you would own, how you could lose money, what you would pay, and when you could leave. This guide focuses on Australian retail managed-fund disclosures. Other investments can use different documents and rules.
Start with the product document
A product disclosure statement, or PDS, sets out a product's features, benefits, risks, charges and complaints arrangements. Use it to locate the information behind a sales description. Make a short reading note with a page reference for each unresolved question so you can ask the provider for a precise explanation. ASIC MoneySmart: PDS definition (opens in a new tab).
For a managed fund, find its assets, intended investment period, minimum entry amount and withdrawal conditions. Check when withdrawals can be delayed or restricted: requesting one does not necessarily mean immediate cash access. ASIC MoneySmart: choosing a managed fund (opens in a new tab).
Read the target-market document separately
A target market determination, or TMD, describes the class of consumers for whom the issuer considers the product likely appropriate. It also addresses distribution and review. Its role differs from a PDS: it explains the intended audience and distribution arrangements, while the PDS explains the product.
The TMD is not an assessment of your individual circumstances. Read its description of the intended consumer alongside your unanswered questions; matching a broad category is not a personalised recommendation. The design and distribution rules have exclusions, so do not assume every investment has a TMD. ASIC: design and distribution questions, particularly questions 1, 3 and 4 (opens in a new tab).
Build a complete cost list
Separate ongoing costs from charges for opening, adding money, switching or withdrawing. Read any performance-fee conditions. Costs within the fund affect returns without necessarily appearing as bank debits. ASIC MoneySmart: managed-fund fees (opens in a new tab).
If you use an adviser or investment platform, check those charges as well. Product costs, advice fees, brokerage and buy/sell spreads can be separate parts of the arrangement. Ask for an explanation of who receives each charge, how it is collected, and the total in dollars for the arrangement being proposed. Identify which costs recur and which arise only when something happens. Do not assume one prominently advertised fee includes everything. ASIC MoneySmart: financial advice costs (opens in a new tab).
Check what a return figure includes
Read performance with its measurement period and valuation date. Establish whether distributions are included and which fees have already been deducted. Counting included income again, or subtracting a deducted fee twice, misstates the result. Keep contribution and withdrawal records alongside statements when reviewing your own investment. ASIC MoneySmart: track your investments (opens in a new tab).
Past performance cannot reliably tell you future returns. Look at longer periods and relevant benchmarks or similar funds; one strong year does not settle the comparison. ASIC MoneySmart: choosing a managed fund (opens in a new tab).
Resolve gaps before relying on the paperwork
Ask the provider to explain unclear terms. For an unresolved service or product dispute, use its complaints process; ASIC MoneySmart's complaints guide (opens in a new tab) explains possible escalation to AFCA. Suspected scams can be reported to Scamwatch (opens in a new tab).