How to read new ETF fact sheets

By Katie Keir | May 18, 2017 | Last updated on December 6, 2023
3 min read

Canadian Securities Administrators has mandated that investors must receive new summary fact sheets whenever they buy ETFs, within two days of a purchase, so that they have a better understanding of each fund. Delivery of these fact sheets isn’t required until December 2018, but many fund providers are already starting to offer them.

The disclosure documents are meant to be more investor-friendly than prospectuses. They’re no more than four pages long, are written in plain language, and can be used in tandem with Fund Facts—similar documents that are required for mutual funds. In both cases, the fund summaries encourage you to look beyond how much funds cost and at whether they’re suitable investments.

As you’re reading the fact sheets, here are a few things to look for.

How risky is it?

The documents talk about standard deviation, an indicator of how widely a fund’s returns have varied over a period. A high standard deviation implies greater volatility, and vice versa for a low reading. “We’ve consistently approached portfolio management utilizing standard deviation as a risk measurement, and have always talked about risk-adjusted returns,” says Wes Ashton, portfolio manager at Harbourfront Wealth Management in Vancouver. If you don’t understand this term or a fund’s risk rating, make sure you ask for clarification.

Standard deviation is a measure of how much an investment’s returns can vary from its average return. It is a measure of volatility and, in turn, risk.

Volatility refers to how fast prices move, which is related to market sentiment and whether securities are trading in typical trading ranges.

Risk ratings are determined based on an evaluation of a fund’s level of risk.

Liquidity relates to how large a fund is and how many shares trade on a daily basis.

Concentration risk relates to the probability of loss arising from being too heavily exposed to a particular sector or company. This can arise from a lack of diversification.

Tracking error refers to the difference between a portfolio’s or fund’s returns and the benchmark or index it was designed to track.

Sources: and

How has the ETF performed?

The fact sheets show how a fund has performed over time and, again, its past volatility should be evident year-to-year. If you’re lower risk, consider choosing a fund with lower volatility. Also think about a fund’s risk rating and, for context, look at how well broad markets and other funds performed over the same time period.

Further, consider the holdings of the fund. “CSA’s testing results suggest investors may glaze over additional information about risk ratings, but [they should know] volatility is only one element of risk. In the case of the TSX, for example, you’re getting concentration risk as you’re buying [heavily] into resource companies and banks,” says Neil Gross, president of Component Strategies Consulting and former executive director of FAIR Canada in Toronto.

Trading ETFs

Note that timing is important when buying and selling ETFs. The funds are more volatile at the start and end of the day. Also look at the fund’s liquidity, given some ETFs are relatively small funds.

“For smaller or more obscure funds, there are only so many shares that trade on a daily basis, so there could be a liquidity issue or a pricing discrepancy,” Ashton says. “But if you’re dealing with larger funds, like [those that track] the S&P/TSX 60 Index, there’s a higher volume of shares that trade daily and, thus, more liquidity and less [of a chance of] price discrepancies.”

And, beware that funds have tracking error. Gross says to alert yourself “to the fact that the performance of the ETF is not going to be exactly the same as the index that it’s tracking, [partially] because of the cost.”

How much does it cost?

Check out this section of the fact sheet for a detailed breakdown of the fund’s fees. Use this section to firm up your understanding of the costs.

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Katie Keir

Katie is special projects editor for and has worked with the team since 2010. In 2012, she was named Best New Journalist by the Canadian Business Media Awards. Reach her at