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As a group, investors obtain smaller earnings than the mutual funds they contributed in. In other...

As a group, investors obtain smaller earnings than the mutual funds they contributed in. In other words investors get a lower say 1 year return than what the mutual fund they invested in got.

What to you think the investors are doing wrong?

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Answer #1

No, investors are not wrong because investors don't have much knowledge of company as mutual funds company have. Mutual fund companies invest the money of investors in various companies irrespective of only one. This diversification of money increases the return from which mutual funds provide some return to actual investors.

If investors does not take help of mutual funds then they are not able to diversify their investment and thus not able to earn higher return. So, mutual funds reduces the risk of investors and give them positive return.

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