The Securities and Exchange Commission of the U.S. government requires that mutual fund companies publish a long and detailed prospectus which covers an array of areas including the cost of owning the fund, the types of stocks the fund invests in,

the management fee, administrative fees and an assessment of the type of risk that holding the fund represents. This is clearly designed with the intent of mitigating the imperfect information problem. However, can you think of any reason why the value of these documents is likely to be quite marginal?

First of all, just because they require mutual funds to publish a prospectus is no guarantee that investors will actually read it. Second, even if they do read it investors may not understand much of the material given that many people may lack personal finance knowledge.