The profit and loss in mutual funds depend on the performance of stock and financial market.
There is no guarantee you will not lose money in mutual funds.
In fact, in certain extreme circumstances you could end up losing all your investments.
What is a disadvantage of a mutual fund?
Mutual funds are the most popular investment choice in the U.S. Advantages for investors include advanced portfolio management, dividend reinvestment, risk reduction, convenience, and fair pricing. Disadvantages include high fees, tax inefficiency, poor trade execution, and the potential for management abuses.
What happens if mutual fund company fails?
For this reason, investors should note that it is extremely unlikely that a mutual fund company or brokerage firm will fail and thus cause investors to lose money. In an extreme and negative financial event, such as a bankruptcy, each fund’s assets would remain in the protective custody of the fund’s custodian bank.
Why mutual funds are in loss?
Investors, who put money in equity mutual funds through systematic investment plans (SIPs) in the past one year, are sitting on losses because of the extended weakness in the stock market. Investors are losing money in 123 out of 147 actively managed equity schemes, as per data from Value Research.