Outlined below are some of
advantages and disadvantages of mutual funds. Every investment has advantages and disadvantages. But it's important to remember that features that matter to one investor may not be important to you. Whether any particular feature is an advantage for you will depend on your unique circumstances. For some investors, mutual funds provide an attractive investment choice because they generally offer
following features:
Professional Management:
Professional money managers research, select, and monitor
performance of
securities
fund purchases.
Diversification:
Diversification is an investing strategy that can be neatly summed up as "Don't put all your eggs in one basket." Spreading your investments across a wide range of companies and industry sectors can help lower your risk if a company or sector fails. Some investors find it easier to achieve diversification through ownership of mutual funds rather than through ownership of individual stocks or bonds.
Affordability:
Some mutual funds accommodate investors who don't have a lot of money to invest by setting relatively low pound amounts for initial purchases, subsequent monthly purchases, or both.
Liquidity:
Mutual fund investors can readily redeem their shares plus any fees and charges assessed on redemption at any time.
But mutual funds also have features that some investors might view as disadvantages, such as: