| What is the meaning of the world mutual funds? | | | | they will not be paying a penny to the fund. |
| Mutual funds are the act of collecting funds from | | | | Since you are entrusting your hard earned money |
| a group of investors for the sole purpose of | | | | to them, there will questions of trust. At the end |
| combining those funds for investment in various | | | | of the day, who is the fund manager really? Who |
| types of markets. The markets that will be | | | | is this guy telling me how i should invest my |
| invested in is the responsibility of the mutual fund | | | | money? Is he really qualified? Or is he a stooge |
| manager. Fund managers normally have a | | | | hiding behind a fancy suit? After all, they all vary |
| benchmark that they use as a guide as to the | | | | in their performance statistics as well as |
| areas they will be investing in. | | | | specialties. They could be great at their specialties |
| Compared to other types of popular investments, | | | | but then you lose out on diversification. Consider |
| mutual funds do have a distinct advantage. | | | | as well, the speculative nature of the markets. |
| Diversification. A wide range of investments can | | | | There will always be losses, the idea of the game |
| be had with a single investment. There is the | | | | is to turn a profit more often than you turn a |
| added benefit of professional supervision as well | | | | loss. This is true of all investments. As such, there |
| from the fund manager. Individuals who have | | | | are always risks that you come out with a loss |
| neither the time nor the means to invest on their | | | | instead of a profit. |
| own reap the rewards in this case. | | | | In the end, mutual funds are still a great form of |
| There are some disadvantages to mutual funds | | | | investment for those without investment |
| which we will touch on now. Over-diversification. | | | | knowledge. The difficulty lies in picking the right |
| Sometimes the opposite is true, not enough | | | | fund manager and company. Generally, mutual |
| diversification is the problem. Also, fund managers | | | | fund companies that consistently return profits |
| have their fees plus commissions should the fund | | | | have very high fees and commissions to go along |
| turn a profit. The price and commissions incurred | | | | with their performance. In my country, Malaysia, |
| for the best fund managers are usually pretty | | | | the top dogs are Public Mutual and CIMB and they |
| high as well. And if the mutual fund tanks, they | | | | charge hefty prices for their services. But then |
| lose nothing but perhaps their reputation and in | | | | again, quality never comes cheap. |
| the worst case scenario, their jobs. Either way, | | | | |