Daly Capital which is UK mutual fund is currently facing the following issues in the investment markets:

As far as the expenses are concerned, UK mutual fund proves to be both the friend and the enemy in this regard. Some of the securities, bonds as well as the instruments do not possess the transaction fee which proves it to be the perfect investment. It is beneficial especially for the investors of the small amount. For most of the investments, UK mutual fund tends to charge the annual expense ratio on the total investment. For example, the investment is $10,000 and the expense ratio is 1%, the annual expense charged is $100. The more the amount of the investment the more the expense ratio will be. This thing discourages the investors to make the investment to Daly Capital.

The increased competition which the UK mutual fund is facing in the share market. Daly Capital has invested in various securities and instruments in different markets. This strategy of putting all the eggs in different baskets is well-appreciated. But the problem is the varying market condition in different regions. Also, it totally depends on both the assets which the mutual fund holds and the market where the mutual fund owns these funds and investments. Some of the instruments may fluctuate on a wide range. At the same time they can provide the investors with the increased opportunity for having the increased returns on their investments. But the 6-years lock in period has restricted the investors from withdrawing their investments. They are unable to sale their instruments in the period specified. They might have the greater returns in this period but they are bound due to the lock-in restriction (Zhdanov, 2018). 

The accumulation of the cash is restricted for the managers of the UK mutual fund. The investors who tend to buy the share of Daly Capital, the manager of the UK mutual fund can turn around in order to buy further shares as per the changing circumstances and the need of the time. He cannot but the large growth stock for the small value fund. On the other hand, if there does not exist the good opportunities to buy, the less desired stock may b purchased by the manager of the UK mutual fund.

Due to availability of the excessive funds, the Daly Capital may go for the over diversification. The availability of so much cash may make the UK mutual fund to own and hold hundreds of the stocks and the instruments in its classification. This thing deviate the fund manager from focusing on the highly potential stocks. It makes the mutual fund to be the more closet index fund (merely reflecting the average within that particular group).

The forceful selling of the stock by the investors of the mutual fund may create a challenging situation for the Daly Capital. It might not possess the enough cash resources in order to meet this demand. This forced redemption may take place due to the sharp decline of the market which is actually a worst situation. This thing leaves the fund manager with no choice. Under these circumstances, he is compelled to take decision even if it is not financially beneficial for the fund. 

If we talk about the tax consequences of UK mutual fund, then strange findings are identified. The tax is owned even if the investment value is going down. In this regard, the annual capital gains distribution is of immense importance. The tax bill is actually passed to the fund in the form of the said form. Both the situations are worse for buying the stock i.e., just before the annual capital gains distribution or the tenure when the fund is generating a lot of profits on the investments. The overall tax liability on an individual investor is greater as compared to the normal circumstances.

There may exist so much price fluctuations that it leads to the volatility or the involuntary risk. These risks may be beyond the control of the investors. It possesses the significant impact on the shareholders and the other investors. The significant parameters may include as given: the purchasing power risk which makes the significant increase to the value of the goods & the services highly affect the future value of the assets, securities and the income, the world economies also tend to have the remarkable impact on the securities and the instruments of the UK mutual fund. The more the changes exist in the world economies, the more it has the impact on the overall prices of the securities, instruments, stocks and assets etc. Monetary policies, unforeseen regulations or deregulation, tax revisions, changes in interest rates, or weather also have the impact on the holdings of the Daly Capital UK mutual fund.

In short term, it is not possible to accurately determine the future prices of the securities and the instruments. Based on the exact and accurate future prediction the mutual fund can have the opportunity to outperform in the market over a specified period of time. But it is the opposite case for the UK mutual fund because no one possesses the ability to make the accurate and the exact future predictions. To be the market leader it is required that “you have to guess what is right and you are required to do it twice”. It is required to do in advance. So as is the case with making the evaluations related to the turn back ups. It is required to be done before the market does that.

In case the UK mutual fund makes the decisions based on the emotions which are devoid of the logics, then it is the situation of the overconfidence. Based on the overconfidence, the UK mutual fund may suffer from the situations as given: inability to make the recognition for the biases. It makes the fund to rely their decisions based on the available information an does not go for making further investigations in order to confirm the presence of the biases.

The UK mutual fund has concentrated its investments to a few markets and or a few stocks. It is just like putting all the eggs in a basket. Even if the fund is aware of the fact that the volatility always pertains in the market place. It makes the fund to lead towards the too much concentration a single industry or the stock.

In the stock market, there exist no surety related to the price fluctuations and the market conditions. Based on the said facts, the decision-making is affected related to the sale or the purchase of the securities at a specified point of time. Many a times, the fund can lead towards the losses by merely depending on the certainty factor about the price fluctuations and the market situations. The adverse price movements are remarkable in this regard.

The UK mutual fund is to suffer from the heavy losses in case it relies on the capabilities of the decision-makers that they are good regarding their financial capabilities. It means that they can better time the market along with the optimum time for making the purchase or the sale decisions as well as the investments plans. It can heavily impact the performance and the decision when a major market move takes place.

References of Current Issues in the investment environment 

Cuthbertson, K. D. N. a. N. O., 2008. UK mutual fund performance: Skill or luck?. Journal of Empirical Finance, Volume 15, pp. 613-634.

Zhdanov, E. M. a. A., 2018. Product market competition and option prices. JStor, pp. 1-55.