Choose wisely. There is only one correct answer to each question.
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1.
Which of the following should you expect when you invest in a focused fund?
Occasional short-term volatility. While a focused fund may have an inexperienced manager or high expenses, investors should almost always expect some short-term volatility.
2.
Which of the following would not qualify as a focused fund?
A fund that has the exclusive attention of its manager. A focused fund owns a few stocks, invests a lot of its assets in its top-10 stocks, or both. One that has a manager's devoted attention is not necessarily a focused fund.
3.
As a general rule, a "focused fund" would hold _______ stocks.
Fewer than 40. There is no precise number, but this is a general rule.
4.
Managers of focused funds defend their portfolios by saying that they can better generate returns with a handful of top-quality stocks than a large collection of stocks.
True. That is their rationale for creating the portfolios, and some investors are attracted to that.
5.
What criteria determine whether a fund is "focused"?
All of the above. A fund can be considered focused if it fits any of these criteria.
