Investors typically cannot ascertain the exact makeup of a fund's portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. This is because of _______ in mutual funds.

Question

Quizplus · Accepted Answer

Mutual funds are managed by fund managers, who have the discretion to buy and sell securities within the fund's portfolio. This means that investors do not have direct control over the fund's holdings and cannot influence the manager's decisions. Additionally, the exact makeup of the fund's portfolio may not be disclosed in real-time, creating a lack of transparency for investors. Price uncertainty and costs despite negative returns may also be factors in mutual fund investing, but they are not directly related to the issue of control and transparency.

Investors Typically Cannot Ascertain the Exact Makeup of a Fund's