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I understand the difference between investing in stock market vs mutual funds and I have also read the main advantage quoted by the mutual fund companies that the experience of fund manager(s) outweighs the cost associated to investing MF vs direct stock market.

Each mutual fund also makes public the investment break up of their fund e.g. 9.4% in company A and 5.6% in company B and so on.

I don't really have the market understanding to start investing in stocks. What if I choose a good mutual fund and just follow the same pattern as that mutual fund and invest in stocks myself and keep adjusting the break up inline with that fund.

Could that give me Equivalent returns of that mutual fund. And since no costs associated to the mutual fund so hopefully better than that MF?

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    Wouldn't there be a delay between what the mutual fund does and what you manage to copy?
    – Flux
    Jul 11, 2021 at 7:38
  • Yes, could be. Probably, the fund managers don't immediately publicize the changes in investment and might be doing it once a month and that could make a big difference.
    – jadeRobo
    Jul 11, 2021 at 7:52
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    Also, depending on how much capital you have and/or how cheap your access to fractional shares is, it can be difficult for you to precisely track the performance of the fund.
    – Maximilian Janisch
    Jul 11, 2021 at 17:20

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It could be a major bookkeeping headache if you are trying to mimic a mutual fund that has many holdings (tracking open positions and tax filing once closed).

You'd need a fair amount of capital unless you used a broker who offered fractional shares. Commissions would have to be very low or zero otherwise you would pay more in fees than the fund which has economy of scale.

And then there's the lag issue... funds don't announce buys and sells in a timely fashion.

I think that you would be better off looking for an ETF with the highest correlation to your fund and the lowest expense ratio. And more than likely, if your targeted mutual fund outperforms the market and no load, just buy the fund.

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Besides the points which were already mentioned in comments, I'd like to add:

  • You might have transaction fees on the single shares you buy and sell.
  • Even if you don't, it costs a lot of time.
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