What are the disadvantages of mutual funds?

The major disadvantages of mutual funds are discussed below:

1. Centralized control: some shareholders do not like the fact that their funds are controlled by a professional manager as they want to look after their money themselves.

2. Extra costs: extra costs need to be paid to ensure that the fund keeps on running as well as possible, which makes these types of investment more expensive.

3. Too much diversity of interest: some shareholders feel that their interests are weakened or diluted due to the large number of shareholders they are working with.

4. Taxes: if you have invested using a mutual funds program, then you will usually be liable to pay capital gains tax which can add on substantial costs.

5. Less control: individual shareholders have less control over where their money is invested, which can be a disadvantage to those who want more autonomy.

You might also like

Comments are closed.