03 Are there any disadvantages to using a mutual fund?
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This article is from the FAQ, by with numerous contributions by others.
03 Are there any disadvantages to using a mutual fund?
Although what one person may view as a disadvantage another may see as a desirable quality, below are some factors which may be disadvantages depending on your point of view:
(a) All mutual funds charge expenses. Whether they be marketing, management or brokerage fees fund expenses are generally passed back to the investors.
(b) Investors exercise no control over what securities the fund buys or sells.
(c) The buying and selling of securities within the mutual fund portfolio
generates capital gains and losses which are passed back to investors even
if they have not sold any of their mutual fund shares.
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