Mutual funds are effectively an investment collective or co-op, where many investors come together and pool their cash and hire a money manager to run the fund and to buy and sell equities, bonds and other investments on their behalf. The investments are handled by the money manager, taking care of all of the diversification and buying and selling decisions, so there is, in theory at least, less risk of losing money than most investors would face if they managed their investment themselves.
However, for this professional management service the investor makes a number of sacrifices. There are generally a number of different fees to be paid, which can prove quite prohibitive. There are expense ratio’s available to compare one fund to another, so as always, Sumitomo Global recommends you research where you are going to put your money. There is less predictability to your income while the investor also loses the ability to control their investment, when to buy and sell for instance and for the most part, gives up the right to decide what to invest in.
This lack of control, coupled with the often high pricing, is what Sumitomo Global has seen turn many investors away from mutual funds.
