Management turnover - Many investors select mutual funds based on their past performance. Unfortunately, with the high rate of management turnover within the asset management industry, the managers who were primarily responsible for a particular fund's superior performance in the past may no longer be working for that company. Therefore, investors should examine not only a fund's past performance, but also who was responsible for that performance and whether or not the same manager or team is still running the fund.

Investment style fluctuations - An investor who wants to maintain a certain asset allocation has to rely on the manager of the fund that he or she selects not to deviate from their stated investment styles. Any changes in priorities or investment styles could override and defeat the investor's asset allocation.

Panic selling - During sharp market downturns, investors often have a tendency to panic. When this happens, they look to sell their fund shares. Since the fund managers must redeem the shares, they have no choice but to sell the underlying securities at a time when there are few, if any, buyers. If not for the flood of redemptions, the fund manager would likely not sell the underlying securities. Thus, the professional manager's expertise, judgment, and objectives are upset and overridden by the actions of the fund's investors.