| Without question, there are some disadvantages | | | | important to incorporate niche sectors, whether |
| with mutual funds. They charge management | | | | short-term bonds, high yield investments, |
| fees that ultimately cut into annual return figures, | | | | small-cap equity, foreign equity, and so on. Almost |
| they invest the way they feel most appropriate | | | | no investor will have professional-level investment |
| without any consideration given to the investor | | | | knowledge in every asset class and sub-class, |
| who pays the manager's fees, they can be | | | | requiring them to seek assistance from other |
| narrowly focussed, and a few others that are well | | | | professionals. Rather than relying on a rogue |
| publicized in the investment industry. | | | | neighbor who dabbles in a specific asset for "fun," |
| However, mutual funds offer tremendous | | | | enlisting the expertise of a highly (often overly) |
| advantages for the majority of the population. | | | | qualified investment manager makes a great deal |
| Three of the most overlooked benefits are | | | | of sense for the price they cost (often, minimum |
| discussed here and they point to the very fact | | | | investment levels are under $2,500) and you |
| that mutual funds are, for the most part, an | | | | usually pay less than 1.5% in expenses. |
| investor's best option. | | | | 3. Mutual funds can have specific or general |
| 1. Mutual funds offer tactical investment | | | | functions depending on an investor's needs. |
| management. Although many funds will take a | | | | Whether an investor needs a complete |
| buy and hold approach, the securities they own | | | | investment solution (such as with a target date |
| are part of the overall portfolio for a very specific | | | | balanced fund or portfolio) or something on a |
| reason. It is rare that a fund manager will | | | | more specific level (such as filling a gap in their |
| purchase a security that he or she feels is a losing | | | | overall asset mix), a mutual fund exists on the |
| proposition. Instead, securities are purchase for | | | | market to fill those gaps, and everything in |
| their specific appeal, whether it is short-, mid-, or | | | | between. |
| long-term capital growth, income, or a combination | | | | As shown with these three simple examples, |
| of both. | | | | there is a mutual fund available to everyone, |
| 2. Mutual funds provide expertise in niche areas | | | | regardless of his or her immediate and long-term |
| where the investor lacks sufficient knowledge and | | | | needs. Of course, other options exist but the |
| skill to take positions in individual securities. With | | | | closest one will find to a mutual fund alternative is |
| asset mix being such an important, vital part of | | | | an exchange traded fund, which often will not |
| any investor's long-term success with their | | | | satisfy the investor's long-term and/or specific |
| investment portfolio, it becomes increasingly | | | | need. |