While a 30 or 40 percent annual return has been considered outstanding for a mutual fund in the past three or four years, fund investors watch jealously as hot individual stocks shoot up 100 or 200 or even 300 percent. More and more companies also are giving employees company stock as bonuses or options, or allowing them to buy the stock within retirement plans.
Taxes are another beef against mutual funds.
Critics complain that most funds don't pay sufficient attention to taxes. Critics also complain that fund expenses in general have not gone down despite the growth in the size of funds, which should in theory lower expenses per shareholder. Despite these and other criticisms, mutual funds remain an excellent investment option for many investors, especially investors with smaller investment portfolios. Riding your retirement nest egg or college fund on the fortunes of a handful of individual stocks is risky. Hot high tech stocks may be today's headlines, yet many stocks falter or earn below average returns.