How to Read an ETF's KID: A Practical Guide
The mandatory information document, explained section by section.
The KID (Key Information Document) is a standardised document that every ETF sold in Europe (and, in a UK-specific form, the UK) must make available to investors — designed to be short (a few pages) and comparable across different products.
What it contains
The KID sets out, in a standard format: the product's objectives, its risk profile (on a scale of 1 to 7), costs (including the TER and any others), past performance (where available), and hypothetical future performance scenarios.
The risk scale
The risk level (from 1, lowest, to 7, highest) briefly indicates the product's expected volatility — a short-term bond ETF will typically have a low level, a sector equity ETF a higher one.
Be careful with the performance scenarios
The performance scenarios in the KID are calculated using a standardised methodology based on the product's historical data (or a benchmark index for newer products) — they aren't forecasts, but statistical projections that should be read with caution, especially the "favourable" scenario, which often looks more optimistic than is reasonable to expect.
Where to find it
The KID is published by the ETF's issuer (e.g. iShares, Vanguard, Xtrackers) on their website, and is generally also accessible through your broker before you buy.