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Bond index mutual funds, including bond exchange-traded funds, pool money from many investors into a common fund that owns an index portfolio (a "fixed basket") of bonds. In theory, bond index funds are just like stock index funds, except they hold bonds instead of stocks. In practice, however, the bond market and bond indexes pose distinctive challenges to fund managers.
A prospectus is a formal document that is mandatory for all stocks, bonds, exchange- traded funds (ETFs) and mutual funds. This document is filed with the Securities and Exchange Commission (SEC); and a prospectus outlines the equity with all the proper information needed for an investor to make an informed decision.
