Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
If you find that you don't have a lot of overlap in your portfolio holdings, you may still be overexposed to one or two sectors of the market.
True. Many times, a fund will have a lot of holdings in one sector. For example, a growth fund may have a lot of tech or pharmaceutical stocks.
2.
If you own one fund from a boutique fund family, how many other funds should you own from that same family if you value diversification?
None. If you own more than one fund run by a boutique or specialist shop, chances are you own two (or more) of the same thing. Boutiques focus on what they do best, and as a result owning more than one of their funds often results in overlap.
3.
Why is portfolio overlap a greater risk for fund investors who also own individual stocks?
Because the investor's funds may also own this stock, making the investor's overall portfolio more concentrated than it seems. That means overlap.
4.
The Morningstar Style Box uses _______.
A fund's current portfolio. In order to gauge overlap, the box must use the most recent holdings.
5.
What do boutique funds do?
Specialize in one thing. A boutique fund will specialize in one thing, whether it is an investment objective, a part of the world, or some other aspect of investing.
