that is the fatal risk on mutual fund:1. do you know what business they are doing? are fact sheet and prospectus sufficient? i dun think so. 2. do you know what they actually do? do they really follow their investment priciple? i dun think so either. 3. when tumoil appears, how do they protect the capital? simply stop trading? but how long? if things turn even severe, funds will lose the control, as shown in spec's post. thus, for funds investment, we have to study the first 2 points as much as possible. besides, study the track record to make sure, in the largest possible extent, that they are not 'gambling' too much. more important, actively manage your portforlio even though funds manager manages for you. but they are still your 'employee'. as a 'boss', we have to be responsible for our own money. hence, in any event, react earlier, at least earlier than the time when courts freeze the funds. (more...)