Monday 17 March 2008

Mutual Funds: Investor Friendly Prospectus

Aren’t you bugged and frustrated with the repeated information in the mutual funds prospectus that goes on page after page yet does not make any sense to anyone?


Related: Should you trust your mutual fund manager?

Well, that’s what most of the mutual fund investors believe. So SEC or Securities and Exchange Commission is planning to shorten the prospectus for mutual funds and come out with an investor friendly prospectus with much less but precise information.

The idea is to help the public zero in on the key performance, cost, risk and other information about their funds, rather than get overwhelmed by the details. Mutual Funds will now have shorter prospectus or “Summary Prospectus” for their mutual funds. They will cite only the basic details like investment plans, investment style and objectives and if the investor wishes, then he may ask for and get a full length prospectus as well.

The idea will be enforced by this year end, however, no date has been finalized.

Hopefully, this new initiative will help investors look at the precise details about risk and investment factors, which in the present form, is being ignored because no one has the time to read all the lengthy reports. Table of Contents

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