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KIM in Mutual Fund: What is Key Information Memorandum & Contents in KIM?

A mutual fund house has various schemes. Offer documents must accompany every scheme. These documents are approved by the trustees and vetted by the SEBI. The offer document has two parts - the Scheme Information Document and the Statement of Additional Information. Key Information Memorandum (KIM) is a summary document of the Scheme Information Document.

What is the Key Information Memorandum (KIM) in Mutual Funds?

The Scheme Information Document is rather detailed and can run into several pages. If you are a regular investor, you know the important sections and can go through them. However, for a first-time investor, the process of going through the Scheme Information Document (SID) could be daunting and hence the abridged version - KIM is part of the Offer Documents. KIM's full form in mutual funds is Key Information Memorandum. It gives a bird’s eye view to the investor. It details all that an investor must know before investing. It is the shrunken version of the SID and possesses critical information. All mutual fund application forms have the KIM attached to them.

What do the contents of the Key Information Memorandum include

Mutual Fund KIM has some important information which is as follows:

Investment relatedObjectiveThis section describes the fund's goal, which is to provide returns close to the total returns of the underlying securities. An investor must remember this is just the aim and not a promise.
StrategyThis is important because it points out the scheme's investment strategy, which can be passive or aggressive. It also discusses the indexing approach.
Asset relatedAllocationKIM in mutual funds explicitly details the assets the mutual fund will invest in. For debt schemes, it can be a mix of government securities, certificates of deposits, treasury bills, etc.
Fund relatedDifferentiationThis section details what sets the fund apart from the rest, how it is managed and why it can give better returns compared to other funds.
Fund relatedAUM & Folio NosThis section details the Asset Under Management of the fund and the number of folios as of a cut-off date.
Risk relatedRisk ProfileAnother important section for an investor is the risk profile. All KIMs will highlight the risks associated with investing in a particular scheme. It specifies the risk factors like market trading risk, sectoral risk, tracking error risk and so on.
The KIM will also specify the risk mitigation measures the fund house takes to minimise the risks.
Price RelatedNAVDetails about the subscription price, the minimum application amount, and the redemption and repurchase method will be stated here.
Scheme RelatedPerformance PortfolioThe KIM gives the investor an idea of the scheme's performance over time, along with the sector allocation and portfolio turnover.
Scheme RelatedExpensesThe expenses of operating the fund house are detailed here. All the one-time and recurring expenses are shown, giving the investor an idea about the expenses involved. The entry and exit load is mentioned. This information allows an investor to know the net returns on the scheme.
Fund manager relatedName The fund manager’s name in the KIM gives the investor an idea about the expert handling their money.
Benchmark If the scheme is being benchmarked against a particular index, it will be a part of KIM. If it is a commodity-related scheme, it will be benchmarked against the commodity.


Additional Read: What is Asset Allocation?​

What is the Validity Period of the Information Memorandum?

KIM in mutual funds is issued along with the mutual fund’s Offer Documents. These documents have a validity period that is one year from the date of the first issue of securities and not from the time it is first subscribed to. The date of inception of the fund is mentioned in the KIM. KIM is also periodically updated.

Conclusion

Knowing the meaning of KIM in mutual funds is inevitable for an investor. It is an abridged version of the SID that provides investors with all the vital information to help them make wise financial decisions. With all the necessary information detailed, the investors must educate themselves and make the most of the information.

Additional Read: What is Benchmark Index?

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Disclaimer:
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit www.scores.gov.in . For more info on KYC, change in various details & redressal of complaints, visit mf.nipponindiaim.com/investoreducation/what-to-know-when-investing This is an investor education and awareness initiative by Nippon India Mutual Fund.

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document. Language Disclaimer:
While utmost care has been taken in translating the article into respective regional language(s), in case of any confusion or difference of opinion, article available in English language should be deemed as final. The article provided herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional advice for the readers. The document has been prepared on the basis of publicly available data/ information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of loss of profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this article. "ABOVE ILLUSTRATIONS ARE ONLY FOR UNDERSTANDING, IT IS NOT DIRECTLY OR INDIRECTLY RELATED TO THE PERFORMANCE OF ANY SCHEME OF NIMF. THE VIEWS EXPRESSED HEREIN CONSTITUTE ONLY THE OPINIONS AND DO NOT CONSTITUTE ANY GUIDELINES OR RECOMMENDATION ON ANY COURSE OF ACTION TO BE FOLLOWED BY THE READER. THIS INFORMATION IS MEANT FOR GENERAL READING PURPOSES ONLY AND IS NOT MEANT TO SERVE AS A PROFESSIONAL GUIDE FOR THE READERS."

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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