Disadvantages Of Mutual Funds

Investors depend on the fund's manager to make the decisions regarding the fund's portfolio  Fund managers are not liable for fund losses due to poor judgment on their part  Fund managers may make so many transactions in the fund that high fee/cost result and are passed on to the investor 

 No

assured returns and no protection of capital  If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio  The value of Stock could fall and be worth less than the principle initially invested

 All

funds charge administrative fees to cover their day-to-day expenses  Investors Pays Fees as long as he remains with the fund  Fees are payable even if the value of funds are rising or declining

 If

the fund makes a profit on its sales, Investors will pay taxes on the income they receive  Fund managers don't consider the investor’s personal tax situation

 Investors

gain less than if they had invested directly in a single security

 Too

much diversification does not protect you from an overall decline in the market  High returns from a few investments often don't make much difference on the overall return

 Fund

Managers builds the investor’s portfolio of shares, bonds and other securities.  High-Net-Worth Individuals may find this to be a constraint in achieving their objectives

 Over

diversification occurs when investors acquire many funds that are highly related and so don't get the risk reducing benefits of diversification