| Outlined below are some of the advantages and | | | | But mutual funds also have features that some |
| disadvantages of mutual funds. Every investment | | | | investors might view as disadvantages, such as: |
| has advantages and disadvantages. But it\'s | | | | Costs despite Negative Returns: |
| important to remember that features that matter | | | | Investors must pay sales charges, annual fees, |
| to one investor may not be important to you. | | | | and other expenses regardless of how the fund |
| Whether any particular feature is an advantage | | | | performs. And, depending on the timing of their |
| for you will depend on your unique circumstances. | | | | investment, investors may also have to pay |
| For some investors, mutual funds provide an | | | | taxes on any capital gains distribution they receive |
| attractive investment choice because they | | | | - even if the fund went on to perform poorly |
| generally offer the following features: | | | | after they bought shares. |
| Professional Management: | | | | Lack of Control: |
| Professional money managers research, select, | | | | Investors typically cannot ascertain the exact |
| and monitor the performance of the securities | | | | make-up of a fund\'s portfolio at any given time, |
| the fund purchases. | | | | nor can they directly influence which securities the |
| Diversification: | | | | fund manager buys and sells or the timing of |
| Diversification is an investing strategy that can be | | | | those trades. |
| neatly summed up as \"Don\'t put all your eggs in | | | | Price Uncertainty: |
| one basket.\" Spreading your investments across | | | | With an individual stock, you can obtain real-time |
| a wide range of companies and industry sectors | | | | (or close to real-time) pricing information with |
| can help lower your risk if a company or sector | | | | relative ease by checking financial websites or by |
| fails. Some investors find it easier to achieve | | | | calling your broker. You can also monitor how a |
| diversification through ownership of mutual funds | | | | stock\'s price changes from hour to hour - or |
| rather than through ownership of individual stocks | | | | even second to second. By contrast, with a |
| or bonds. | | | | mutual fund, the price at which you purchase or |
| Affordability: | | | | redeem shares will typically depend on the fund\'s |
| Some mutual funds accommodate investors who | | | | net asset value, which the fund might not |
| don\'t have a lot of money to invest by setting | | | | calculate until many hours after you\'ve placed |
| relatively low pound amounts for initial purchases, | | | | your order. |
| subsequent monthly purchases, or both. | | | | Making any sort of investment involved a certain |
| Liquidity: | | | | amount of risk so it is always wise to seek the |
| Mutual fund investors can readily redeem their | | | | advice of a professional before making any |
| shares plus any fees and charges assessed on | | | | decisions. |
| redemption at any time. | | | | |