Could Mutual Fund Family Go Broke?

Kristy asks Dave is a mutual fund family could eventually go broke.

QUESTION: Kristy’s husband has chosen one fund family for their money where all their mutual funds and IRAs are held.  Kristy is concerned about these fund families going broke.  Is that a valid concern?

ANSWER: Your money is not just invested in one company – it is actually in hundreds of companies.  One mutual fund is spread out over 80 to 200 different companies’ stocks.  For example, if you have your 4 different types of mutual funds all in Fidelity, your investment is spread out over 320 to 800 different companies.  Fidelity is just the fund family, but your investment is not in them.

There has never been a growth stock mutual fund company or fund family go broke.