Choose wisely. There is only one correct answer to each question.
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1.
Funds following the multiple-manager system _______.
Use two or more people who work independently of each other to choose investments. Team-managed funds use two or more people who work together. Single-manager funds use one lead manager with others pitching in with research and trading. At multiple-manager funds, a number of managers work independently of each other.
2.
If you're choosing between two equally good funds, consider avoiding the one _______.
Run by a single manager who's the only star in the fund family. While star managers may seem alluring, be sure that there's some back-up or bench strength in the family. Why? Because managers who do well at mediocre families eventually move on.
3.
Which type of fund is least affected by manager changes?
Index funds. Because index funds are passively managed--in other words, their managers aren't actively choosing which securities to buy or to sell--manager changes don't matter much.
4.
Funds following the management team system _______.
Use two or more people who work together to choose investments. Single-manager funds use one lead manager with others pitching in with research and trading. At multiple-manager funds, a number of managers work independently of each other. Team-managed funds use two or more people who work together.
5.
Funds following the single-manager system _______.
Use one lead manager and a group of traders and research analysts. Team-managed funds use two or more people who work together. At multiple-manager funds, a number of managers work independently of each other. Single-manager funds use one lead manager with others pitching in with research and trading.
