Prospectus is a legal document for market participants and investors to pursue, detailing the features, prospects and promise of a financial product.
It is mandated by the law to be supplied to prospective customers.
In an IPO, the prospectus tells potential shareholders about the company’s plans and business model.
For insurance and investment fund customers, a prospectus lists out the objective of the product, inclusions and exclusions, fees etc.
For an ETF, a prospectus informs likely investors of the fund’s goals, history, portfolio, fees and costs, and other financial details.