The Factsheet Tricks, 9 of 10
Story instead of evidence
Pages of outlook and themes in place of risk-adjusted results.
What it is
Market commentary, economic outlooks and sustainability narratives can fill a factsheet without telling you how the investment actually did. A label can also promise more than the holdings deliver.
Why it works
- EU guidelines say risks must appear alongside rewards, and past performance should not be the main information.E1
- A peer-reviewed study found that, on average, US funds marketed as ESG did not hold companies with better labour or environmental records, and charged higher fees.E16
- US and EU regulators now require funds with ESG-style names to invest at least 80% in line with the label.E17
Illustration, not a real fund
Our outlook: opportunity in a changing world
A sustainable approach for the long term
Themes we are watching this quarter
Performance: see page 4
Blue is story, green is evidence. Count the lines of each.
How to spot it
- Take any factsheet and highlight the evidence in green and the story in blue. Compare the two.
- Ask whether the holdings match the name.
What OpenFactsheet does
Numbers only: the gains, the losses, the time to recover, the risk-adjusted results and how reliable the data is.
Sources
- E1 ESMA (2021). Guidelines on marketing communications under the Regulation on cross-border distribution of funds, ESMA34-45-1272.
- E16 Raghunandan, A. & Rajgopal, S. (2022). "Do ESG funds make stakeholder-friendly investments?" Review of Accounting Studies 27(3), 822–863.
- E17 U.S. SEC (2023). Press release 2023-188, Names Rule amendments. ESMA (14 May 2024). Guidelines on funds' names using ESG or sustainability-related terms.
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Your money deserves more than a sales pitch. These are techniques, not accusations. We don't name or rate any fund or firm.