Is it risky to have most of investments with one mutual fund company?

Is it risky to have most of my investments with one mutual fund company?

Is it risky to have most of my investments with one mutual fund company?

It depends! One mistake we have seen investors make in the past is to assume that because they have a couple of different mutual funds they are diversified. This may not be the case, which is why it’s important to know what you are investing in by reading a fund’s prospectus and fact sheet if available. Look at the types of mutual funds you are investing in rather than the fund company. You can build a completely diversified portfolio using a large mutual fund company, such as Vanguard. The best course of action is to check with Morningstar.com and upload your portfolio (premium service) to see what overlap your portfolio may or may not have. You can then make adjustments before any surprise moves occur in your portfolio.

However, if you are worried about the sustainability of a mutual fund company, in most cases you shouldn’t be. Mutual funds are organized as trusts and are technically not owned by anybody. Even if the company you hold your mutual fund in goes belly-up, your assets are protected since they are held at a third-party custody bank. In all likelihood, the fund’s board of directors will meet to hire a new adviser for your mutual fund. There are more mutual funds than publicly traded stocks, so you should take time to thoroughly research any investment before deciding to purchase. Find a company that gives you confidence, has low fees, and good performance. The mutual fund industry is too big to have to settle for a mediocre investment opportunity.

 

 

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