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Part: 2 Why Investors Can Have Problems ... > Mutual Funds Are Sold, Not Bought

Chapter 8. Mutual Funds Are Sold, Not Bought

We now turn to how investors buy their mutual fund shares and the pressures they face in doing so. If, as we consider later, mutual funds are not always the best alternative for investors in today's world, we need to ask ourselves how mutual fund ownership comes about in the first place and what pressures exist to get shares into investor hands.

There is also a second issue here. Investors are likely to be persuaded to purchase actively managed funds because many of these carry sales charges. Even if they do not—meaning they are no-load funds—the more assets the fund manager has to manage, the larger the total fees for doing so. Investors might be better off with index funds, but the incentives to sell them anything but index funds are large.


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