2. RETURNS
Mutual funds are like
many other investments
without a guaranteed
return: there is always
the possibility that the
value of your mutual
fund will depreciate.
4. RETURNS
When deciding on a
particular fund to buy,
you need to research
the risks involved – just
because a professional
manager is looking after
the fund, doesn’t
guarantee good
performance.
6. ADVERTISING
The first thing you need
to be aware of is to
ignore the pretty
brochures and attractive
advertising.
7. ADVERTISING
Some funds may be
incorrectly labeled and
can therefore
manipulate prospective
investors by using
names that “sound
nice.
8. ADVERTISING
Instead of labeling
itself a small cap, a
fund may be sold as a
“growth fund”. Or, the
“Zimbabwe High-Tech
Fund” could be sold
with the title
“International High-
Tech Fund”.
12. DIVERSIFICATION
The reverse is also true if investors acquire
many funds that are highly related and,
obviously, don’t get the risk reducing
benefits of diversification. If a fund invests
only in a particular industry or region it is still
relatively risky.
13. FEES
Mutual funds provide
investors with
professional management,
but by allowing you to
take a hands-off approach
to investing comes at a
cost. You pay operating
fees charged as an annual
percentage – usually
ranging from 1-3%.
14. You’ll also pay fees for
purchasing or selling the
funds. These are fees you
have to pay regardless of
the performance of the
fund. This means that
even if your fund doesn’t
make any money, you’ll
still have to pay the fees.
FEES