Higher risk: Equity funds carry relatively higher risk as compared to debt funds and are not suitable for risk-averse investors.
Lock-in period: Certain equity funds such as ELSS carry a lock-in period of 3 years, thus making the investment less liquid.
Exit Load: It is the fee that investors have to pay to the mutual fund company for redeeming the units held before the stipulated period. Since this is not included in the expense ratio, it increases the cost of investing and reduces the returns.
Market Risk: It is the risk of loss arising due to changes in market prices of securities. This can even lead to the loss of capital if prices fall too much.
Lack of Control: The funds are managed by fund managers. Hence, individual investors do not have any control over the securities or assets in which their money is being invested.