{"concept":{"id":29,"slug":"fund-prospectus","term":"Fund prospectus","shortDefinition":"A document that summarizes a fund's essential information -- objective, investment policy, risk profile, costs, and historical performance -- before investing.","longDefinition":"The fund prospectus, also called the Key Information Document, summarizes the essential information an investor needs to decide with sound judgment, without having to read the fund's full regulations: its actual objective and investment policy (not just what its commercial name suggests), its risk profile, its total costs, and its historical performance -- always with the caveat that past performance doesn't guarantee future results. It's updated periodically, so it's worth always checking the current version."},"relations":{"requirement":[],"contrast":[],"related":[{"concept":{"id":26,"slug":"investment-fund","term":"Investment fund","shortDefinition":"A vehicle that pools money from many investors to invest jointly in a portfolio of assets, managed by a professional management company.","longDefinition":"An investment fund pools money from many investors to invest it jointly in a portfolio of assets, managed by a professional management company. An index fund (already covered) is one specific case of an investment fund that follows passive management -- but not all funds work that way: management can be active or passive, depending on whether a management team makes ongoing decisions about what to buy or simply tracks an index."}}],"calculatedBy":[]},"curricularPosition":[{"id":24,"moduleId":8,"slug":"how-to-read-a-fund-prospectus","title":"How do you read a fund's prospectus?","summary":"You know what information to look for in a fund's prospectus before investing, beyond its commercial name.","bodyMarkdown":"## Objectives\n\nBy the end of this lesson you know what information to look for in a fund's prospectus before investing, beyond its commercial name.\n\n## Content\n\nBefore investing in a fund, there's a document -- the prospectus, or Key Information Document -- that summarizes the essential information you need to decide with sound judgment, without having to read the fund's entire regulations.\n\nIn that prospectus, it's worth looking for four things. First, the fund's objective and investment policy: what it actually invests in, not just what its commercial name suggests. Second, its risk profile, usually expressed on a numerical scale. Third, its total costs, including the management fee you'll cover in detail in the next lesson. And fourth, its historical performance -- always with the caveat that past performance doesn't guarantee future results.\n\nA fund's commercial name doesn't always accurately reflect its actual investment policy. That's why the prospectus -- specifically its investment policy section -- is the reliable source for knowing what a fund actually invests in, not the name or the marketing around it.\n\nThis document is usually updated periodically, so it's worth always checking the current version before investing, not an older one you may have seen at another time.\n\n## Example\n\nA fund with a commercial name that sounds conservative may, according to its prospectus, invest a significant percentage in higher-risk assets. Only the investment policy section of the prospectus confirms this precisely -- the name alone doesn't.\n\n## Common mistakes\n\n- Deciding to invest in a fund based only on its commercial name or its past performance, without reading its actual investment policy.\n- Thinking a fund's historical performance guarantees a similar result in the future -- the prospectus itself explicitly warns that this isn't the case.\n\n## Summary\n\nA fund's prospectus summarizes its objective, investment policy, risk profile, costs, and historical performance -- it's the reliable source for deciding, not the commercial name or the marketing.\n\n## Self-check\n\nWhy isn't a fund's commercial name enough to know what it actually invests in?\n\nWhat does it mean that historical performance doesn't guarantee future results?","bodyHtml":"<h2>Objectives</h2>\n<p>By the end of this lesson you know what information to look for in a fund's prospectus before investing, beyond its commercial name.</p>\n<h2>Content</h2>\n<p>Before investing in a fund, there's a document -- the prospectus, or Key Information Document -- that summarizes the essential information you need to decide with sound judgment, without having to read the fund's entire regulations.</p>\n<p>In that prospectus, it's worth looking for four things. First, the fund's objective and investment policy: what it actually invests in, not just what its commercial name suggests. Second, its risk profile, usually expressed on a numerical scale. Third, its total costs, including the management fee you'll cover in detail in the next lesson. And fourth, its historical performance -- always with the caveat that past performance doesn't guarantee future results.</p>\n<p>A fund's commercial name doesn't always accurately reflect its actual investment policy. That's why the prospectus -- specifically its investment policy section -- is the reliable source for knowing what a fund actually invests in, not the name or the marketing around it.</p>\n<p>This document is usually updated periodically, so it's worth always checking the current version before investing, not an older one you may have seen at another time.</p>\n<h2>Example</h2>\n<p>A fund with a commercial name that sounds conservative may, according to its prospectus, invest a significant percentage in higher-risk assets. Only the investment policy section of the prospectus confirms this precisely -- the name alone doesn't.</p>\n<h2>Common mistakes</h2>\n<ul><li>Deciding to invest in a fund based only on its commercial name or its past performance, without reading its actual investment policy.</li><li>Thinking a fund's historical performance guarantees a similar result in the future -- the prospectus itself explicitly warns that this isn't the case.</li></ul>\n<h2>Summary</h2>\n<p>A fund's prospectus summarizes its objective, investment policy, risk profile, costs, and historical performance -- it's the reliable source for deciding, not the commercial name or the marketing.</p>\n<h2>Self-check</h2>\n<p>Why isn't a fund's commercial name enough to know what it actually invests in?</p>\n<p>What does it mean that historical performance doesn't guarantee future results?</p>","sortOrder":2,"readingMinutes":6,"difficulty":"Básico","url":"/en/academy/fundamentals/investment-funds/how-to-read-a-fund-prospectus"}],"graphSummary":{"root":{"type":"concept","id":"29","depthFromRoot":0,"entity":{"type":"concept","slug":"folleto-del-fondo","term":"Folleto del fondo","excerpt":"Documento que resume la información esencial de un fondo -- objetivo, política de inversión, perfil de riesgo, costes y rendimiento histórico -- antes de invertir."}},"depth":1,"returnedNodes":1,"truncated":false,"hasCycle":false,"nodes":[{"type":"concept","id":"29","depthFromRoot":0,"entity":{"type":"concept","slug":"folleto-del-fondo","term":"Folleto del fondo","excerpt":"Documento que resume la información esencial de un fondo -- objetivo, política de inversión, perfil de riesgo, costes y rendimiento histórico -- antes de invertir."}}],"edges":[]},"relatedNews":[],"relatedEntities":[]}