Mutual funds can increase returns by buying high risk investments, which have high returns.
For example, a mutual fund may expect to get higher than normal returns by investing in FANG stocks (Facebook, Amazon, Netflix, and Google). The fund managers are chasing high returns.
This strategy can work well as long as the high risk stocks are giving high returns. The problem with the strategy is if the stock market or high risk stocks take a large hit, reduction in price. At this point, the mutual fund return can quickly become negative.
Therefore, at this point in the stock market cycle, investors should make sure to adequately diversify their portfolio, and review the stock portfolio which are in any mutual funds which they own. A mutual funds is only as good and safe as its underlying investments.
If you have lost money from investing, and need assistance with securities arbitration, please feel free to contact
Attorney Robert M. Singer
2572 Whitney Avenue, Hamden, CT 06518