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How to Read a Fund's KID Document and What to Look For
Key takeaways
- A KID (Key Information Document) is a standardised document of no more than 3 pages that every UCITS ETF offered in the EU must have — it is a mandatory legal format.
- The most important figures are: SRI (risk indicator 1–7), TER (total annual costs), transaction costs, and performance scenarios.
- The "What are the costs?" section reveals the actual annual costs including transaction costs beyond the TER.
- Performance scenarios in the KID are model calculations, not forecasts — treat them as a framework, not a promise.
- When comparing two funds tracking the same index, watch TER + transaction costs + tracking difference, not just TER.
A KID (Key Information Document) is a legally mandatory standardised document of no more than three A4 pages that every UCITS ETF must make freely available before purchase — and it is the fastest route to objective information about a fund.
Where to find the KID
Every broker is required to make the KID available for each product before an order is placed. Alternatively: the fund manager's website (iShares.com, vanguard.co.uk, xtrackers.com) or aggregators such as justETF.com or etfinfo.com — enter the ISIN and select the "Documents" tab.
How to read the KID: section by section
1. Fund objectives — first paragraph. Verify that the fund tracks the index you want (watch for "similar" vs. "identical"). Check whether it is accumulating (Acc) or distributing (Dist).
2. SRI (Summary Risk Indicator) — scale of 1–7. Global equity ETFs typically score 4–5. Bond ETFs 2–3. The number does not show how much the fund might fall — only how volatile it has historically been. Do not confuse it with a warning.
3. Performance scenarios — model calculations for 1, 3, and 5 years across four scenarios (stress, unfavourable, moderate, favourable). The figures are mathematical projections from historical volatility, not forecasts of the future.
- Focus particularly on the stress scenario — how much could you lose in the worst model case?
- Do not compare two different funds by their favourable scenario — the methodology may differ.
4. Costs — the golden section. Distinguish:
- TER (Total Expense Ratio) / ongoing charges: annual management fees.
- Transaction costs: the cost of trading inside the fund (rebalancing). For passive ETFs, typically 0.01–0.05% p.a.
- Entry/exit fees: typically 0% for ETFs — your broker charges their commission separately.
What the KID does not tell you
The KID does not show the tracking difference — the actual deviation of the fund's return from the index after all costs. You can find that on justETF.com or trackingdiff.com. The tracking difference is the most accurate indicator of the true cost of a fund. More on selecting a specific ETF in the ETF section or in the article on UCITS protection What is UCITS and why it protects retail investors.
FAQ
Where do I find the KID for an ETF I want to buy?
On the fund manager's website (iShares.com, vanguard.co.uk, etc.), on justETF.com by entering the ISIN, or directly with your broker in the product details. The KID must be freely available before every purchase.
What is the SRI in the KID and what does it tell me?
The SRI (Summary Risk Indicator) is a scale of 1–7 assessing the fund's historical volatility. 1 = lowest, 7 = highest. Global equity ETFs typically have an SRI of 4–5. The number does not show the maximum possible loss — only the historical degree of price fluctuation.
Why is it not enough to look at just the TER when choosing an ETF?
TER does not include transaction costs inside the fund. These can add 0.01–0.1% per year on top. The most accurate indicator is the tracking difference — the actual deviation of the fund's return from the index, available on justETF.com.