How trustworthy are these mutual funds? Are they not gambling with public money without any control?



If the mutual funds are not designed to generate better returns for investors, who do not want to mess up with the stock markets, why should the MFs be allowed to collect public money? If their fund managers are there to say, “fund value is down because the market is down,” what credibility rests with them to be placed as fund managers?

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  1. When you buy a Mutual Fund…. you buy it with the “risk” in the market. The Mutual Fund managers are judged by their performance over long periods of time. A fair judging can only be done over 10 years or more…. in comparison to their peers and the appropriate index.

    You should not be in Mutual Funds if you don’t understand this. The funds are down because the market is down. This risk is your responceability to understand. Right now a Mutual Fund manger may be doing great if they’re down 35% and their peers are down 40%.

    Start your education with;
    Mutual Funds For Dummies
    also…. read the prospectus of a fund before you get in it. Make sure your “asset allocation” model is always current.


  2. They ARE designed to generate better returns for investors. There is no guarantee that they will. Small investors can get a manager through a fund cheaper than they could on their own. It is true that most funds don’t outperform the market over the long term, after subtracting the fees.


  3. By the way, there are plenty of controls on public mutual funds. In the US, they are regulated by the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940. This is one of the most regulated parts of the investment industry, and has been remarkably scandal free. (as opposed to hedge funds, like Madoff’s, which are virtually unregulated)

    You can’t make money in a down market. If you are making money in a down market, you are probably taking some kind of extra risk, or running a Ponzi scheme.

    This is the reason why a lot of investors have been running away from the stock markets lately, and putting their money in T/Bonds, Gold, cash, or whatever they think will maintain its value. Of course, this makes the stocks go down even more, because there is less demand.


  4. Mutual funds are designed to limit risk. When the whole market goes down, it is impossible for the MF not to go down. Its purpose is to minimize risk, and increase profits in good times with a safety net. There are mutual funds that are money markets. These funds are the safest right now, but with minimal returns. Mutual funds are trustworthy over a span of time. Even bond funds are down!