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.
To avoid overlap, how many large-blend funds should you own if you already have a large-value and a large-growth fund?
Maybe none. Because the large-cap universe is small, there's little need to own a large-blend fund if you already have funds from the large-value and large-growth categories.
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.
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.
5.
In the Morningstar Style Box, which square would provide diversification to a large-growth fund?
A small-value fund. The corners are the areas that show where diversification would be. A small-value fund would therefore offer the most of that.
