What is the primary purpose of an investment fund's prospectus?

The primary purpose of an investment fund's prospectus is to inform investors of risks and objectives. A prospectus is a formal document that outlines essential information about the fund, including its investment strategy, potential risks, and objectives. This information is critical for investors to make informed decisions about whether the fund aligns with their investment goals and risk tolerance.

By detailing the risks associated with the investment, the prospectus ensures that investors are fully aware of what they are investing in and what they might expect in terms of performance and volatility. It also describes the fund’s objectives, helping investors understand how the investment might fit into their overall financial strategy.

A prospectus is required by regulatory bodies to protect investors, ensuring that they have access to all pertinent information before making an investment. This transparency is crucial for maintaining trust and integrity in the investing process.