InvestorQ : Why people trust is shrinking from the Mutual fund Industry?
Diya Chitale made post

Why people trust is shrinking from the Mutual fund Industry?

simran Kaur answered.
1 year ago
Most of the investors have shifted to mutual funds because they offer better returns as compared to fixed deposits and other fixed-income investment options. Also, even there was some risk involved, the returns managed to attract investors.

1) For now, the market is significantly uncertain and hence investors are panicking considering the fact that neither the returns nor the initial investment is guaranteed under mutual fund investment. 

2) Another reason could be that even though the bank interest rates are lower than the mutual fund investment, the gap between the two has been reduced and now there's only a slight variance. Therefore, investors are considering safe investment options like bank FDs, Term deposits, etc. during this swinging phase. 

3) Mutual fund companies are managed by professionals and it is not easy for every other individual to understand how mutual funds work, so investors do not want to be involved in that much chaos for getting .5%-1% excess returns, rather they choose easy options.

4) While the mutual funds have attractive returns in the long-run, they are less beneficial in the short-run and hence investors are shifting to other investment options to cater to their short-term needs and to develop their contingency funds.

5) Mutual fund organizations charge fees for providing the investors with suitable portfolios and sometimes these costs are also higher.