Choose wisely. There is only one correct answer to each question.
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1.
Unpopular mutual fund categories are categories _______.
That don't have much money going into them. We use cash flows to determine a category's popularity. Unpopular categories are often poor performing categories, but not always.
2.
What should you do about popular categories of funds that you own?
Consider cutting back on them. Popular categories tend to underperform unpopular categories. As such, think about taking some profits away from popular categories, but don't do wholesale selling. That practice may upset your asset allocation and lead to taxable events.
3.
To help improve your odds when buying unpopular funds, _______.
Buy one fund from each of the three unpopular categories. Be sure to buy one fund from each category because not all unpopular categories thrive, nor do they thrive at the same time.
4.
Morningstar's unpopular-funds strategy can produce positive results because _______.
Fund investors often have lousy timing. Because fund investors buy high and sell low (rather than the other way around), opportunists have the potential to make money by buying what others are selling.
5.
Because so many fund investors buy high and sell low instead of the other way around, opportunists can make money by buying what others are selling.
True. Most investors have bad timing. An opportunist can use this to his or her advantage.
