There
is always the risk that a mutual fund won't meet its investment
objective or provide the return you're seeking. And some
funds are, by definition, riskier than others. For example, a
fund that invests in small new companies — whether for growth
or value — exposes you to the risk that the companies will
not perform as well as the fund manager expects. And in market
downturns, falling prices for a fund's underlying investments
may produce a loss rather than a gain for the fund.
Management changes
Changes in a fund's management may also
affect whether a fund achieves its objective. The fund company
may, for one reason or another, replace a fund manager or the
manager may resign. This change may be significant since the manager
controls the fund's investments.
For example, a stock fund that has realized
modest gains under one manager may become more volatile if the
fund's new manager seeks more robust growth. And if a fund's
investment style changes, it may no longer be aligned with your
investment objectives in any case.
The right to vote As an investor, you have the right to vote on changes a fund proposes in its underlying investment policies, including the amount of money
it can
leverage,
or borrow to make additional investments.
There
is always the risk that a mutual fund won't meet its investment
objective or provide the return you're seeking. And some
funds are, by definition, riskier than others. For example, a
fund that invests in small new companies — whether for growth
or value — exposes you to the risk that the companies will
not perform as well as the fund manager expects. And in market
downturns, falling prices for a fund's underlying investments
may produce a loss rather than a gain for the fund.
