Hello Grasshoppa,

Is it worth it to invest in Mutual Fund? This is a common argument among many investors & investment gurus about how bad or good mutual fund is but when we look at the history of mutual fund in Malaysia, company like Public Mutual is ranked the best Mutual Fund company in Malaysia even though some investors complained that their load fee is too high. Since one of my mentors run an agency firm that carries various mutual funds, he always mention that there is no free lunch in this world. Do you agree with this statement?

Many investment gurus & books suggest that Mutual Fund is a bad investment to make but is it really that bad? Personally, I started to invest in Mutual Fund since 2008 & I completely sold all my Mutual Fund in 2018 to switch to Robo-Advisor. Did I lose any money in Mutual Fund? The answer is NO. In fact, some of my funds make me around 5%-15% return.

What I Like About Mutual Fund?

1. It’s Managed By Professional Fund Manager
It can be a good thing or it can be a bad thing too. Good thing is, if the fund manager manage the fund well then I may able to enjoy good amount of return. If the fund manager is bad, I may not able to have good return. One of the famous fund managers that I have featured in my recent post is Peter Lynch. You can read about him & his investment strategies HERE.

2. I Can Invest in Various Countries or Assets
As a stock investor, I limit my stocks investment to Malaysian Stocks. It is because I have a better understanding on Malaysia Market since I’m based in Malaysia & most of the stocks I own is the company that I do spend my money on as consumer or customer. I do have my eyes on USA stocks but I have yet to make any investment so far. With Mutual Fund, I am able to invest in other countries such as China, Europe & USA or I can invest in other assets as well.

3. I Can Save More Time
Even though I rarely monitor my stocks performance, my monitoring towards my mutual fund is way lesser than my stocks. The reason I rarely monitor both is because I look at my investment as a long term investment. And remember, I am paying someone management fees to monitor my investment in mutual fund.

4. It’s An Affordable Investment to Start With
You can start to invest with as low as RM500 & your monthly investment can be as low as RM100. That was how I started to invest with my low salary in 2008. RM100 per month is not too heavy for me back in those days.

What I Dislike About Mutual Fund?

1. High Load / Sales Fees
There are plenty of Mutual Fund Companies in Malaysia that are charging between 1.75%-5% Load Fees. Some companies will mention that there is no Load Fees but watch out because they will actually mark up that fees into your fund price.

2. Management Fees
On top of Load Fees that you have to pay to your agent, you have to pay additional amount of money to the Fund Manager. Of course there is no free lunch in this world but paying it twice may cause additional profit to be taken away from you. P/S: You still have to pay them if the fund under performs. LOL.

3. Yesterday’s Return Does Not Mean A Good Return Tomorrow
It links back to What I Like About Mutual Fund. What if my Fund Manager leaves the company & they are replaced by other Fund Manager? This may cause my investment return to be lower or negative.

4. My Fund Manager is the Owner of the Stocks
Unlike stocks investment where I am part owner of the company, I do not have any ownership of the companies the Mutual Fund Company invest in. That means, I can’t attend any AGM or have any voting rights.

5. Your Fund Manager may Appoint another Mutual Fund Company to Invest on Behalf
This is a bad thing. Why? Because it will result in multiple Management Fees incurred. Imagine we are paying Load Fees & Management Fees to the Mutual Fund Company but at the same time, they are paying another Mutual Fund Company to manage your fund. Sounds complicated but it happens to some funds. If you are investing in any Mutual Fund, you can checkout their Annual Report to find out more on that.

6. Not Much Visibility
In my few years of investing in Mutual Fund, I find that some of my Mutual Fund investment is less visible in terms of which stocks they invest in & other details.

In Your Opinion, Do You Think Mutual Fund is Worth To Invest?

After completing what I like & what I don’t like about Mutual Fund, I realize that I have more Dislikes than Likes. LOL. But it’s kinda true. Like I mentioned earlier, I have sold all my Mutual Fund to invest in a Robo-Advisor called StashAway. Or if you are looking to explore other Investment Platform, you can also checkout Funding Societies. Both companies are offering LOW MANAGEMENT FEES & personally I am more comfortable since I have more VISIBILITY on my investments.

That is my opinion. How about yours? Do leave your comments & opinions below so we can further discuss on this topics.

You can also check out my other posts that I wrote about Mutual Fund :
1. What Your Mutual Fund Agent Did Not Tell You About Using EPF To Invest In Mutual Fund 
2. Your Official Guide On How To Invest In Mutual Funds In Malaysia

OSS!