mutual funds mutual funds

mutual funds
mutual funds mutual funds   mutual funds

Welcome to the Mutual Funds Resource Center

Mutual funds vs. other investments

From an investors' viewpoint mutual funds have several advantages such as:
  • Professional management and research to select quality securities
  • Spreading risk over a larger quantity of stock whereas the investor has limited to buy only a hand full of stocks. The investor is not putting all his eggs in one basket
  • Ability to add funds at set amounts and smaller quantities such as $100 per month
  • Ability to take advantage of the stock market which has generally out performed other investment in the long run
  • Fund manager are able to buy securities in large quantities thus reducing brokerage fees
However there are some disadvantages with mutual funds such as:
  • The investor must rely on the integrity of the professional fund manager
  • Fund management fees may be unreasonable for the services rendered
  • The fund manager may not pass transaction savings to the investor
  • The fund manager is not liable for poor judgment when the investor's fund loses value
  • There may be too many transactions in the fund resulting in higher fee/cost to the investor - This is sometimes call "Churn and Earn"
  • Prospectus and Annual report are hard to understand
  • Investor may feel a lost of control of his investment dollars
  • There may be restrictions on when and how an investor sells/redeems his mutual fund shares