There are some disadvantages restrictions impose on the mutual fund investment action like equity exposure generally range from 75% to 95% of its NAV (Net Asset Value). So it means when the economy in down turn, the fund no matter how needs to invest atleast 75% of its NAV in stock market. It is the same as at most 95% in the stock market when economy is going up. This rule definitely will restrict the performance of the fund and it makes the fund performance almost in line with the KLCI benchmark.
Mutual fund normally will charge the investor a 5.5% service charge and 1.5% management fee. What does this mean?
It means your hard earn money before put into the investment and get the fruitful return, there is 5.5% of your money already gone. And within the whole financial year, they will charge you another 1.5% yearly management fee (will be divided on daily basis) no matter they help you make any return or not. So total 7.0% burn already without any reason. For the 7.0% burn, your fund must make atleast 7.53% return to cover back your initial investment capital. Yes! Believe me! There is 7.53%!
If another guy B put the same amount of the capital into fixed deposit and the return is 3%. Then that’s mean that guy, B return is outperformed the previous guy, A 10.53% without any risk!!
Mutual fund is too over diversify, normally they invest around 30 to 50 stocks at one time. It is less chance for them do have a bad performance relative to KLCI index in a single year so as well as good performance.
The mutual fund managers are paid consistently no matter how the funds perform. It is unfair for a person to receive a good pay but doing a moderate job.
However there are mutual fund managers do a very good job in the investment field and did bring a good return for investor, so if you want to invest in mutual fund, please think about the pros and cons and put your money only with those capable fund managers.
Mutual fund normally will charge the investor a 5.5% service charge and 1.5% management fee. What does this mean?
It means your hard earn money before put into the investment and get the fruitful return, there is 5.5% of your money already gone. And within the whole financial year, they will charge you another 1.5% yearly management fee (will be divided on daily basis) no matter they help you make any return or not. So total 7.0% burn already without any reason. For the 7.0% burn, your fund must make atleast 7.53% return to cover back your initial investment capital. Yes! Believe me! There is 7.53%!
If another guy B put the same amount of the capital into fixed deposit and the return is 3%. Then that’s mean that guy, B return is outperformed the previous guy, A 10.53% without any risk!!
Mutual fund is too over diversify, normally they invest around 30 to 50 stocks at one time. It is less chance for them do have a bad performance relative to KLCI index in a single year so as well as good performance.
The mutual fund managers are paid consistently no matter how the funds perform. It is unfair for a person to receive a good pay but doing a moderate job.
However there are mutual fund managers do a very good job in the investment field and did bring a good return for investor, so if you want to invest in mutual fund, please think about the pros and cons and put your money only with those capable fund managers.
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