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1.
As a mutual fund family grows, its funds will continue to perform their original roles.
False. Sometimes a fund changes its focus, for example from small-cap to mid-cap.
2.
Why might asset growth be a bad thing for some mutual funds?
It can ultimately lower returns. Having a lot of assets can sometimes weigh down returns.
3.
Why is it important to monitor your fund families?
Both of the above. Changes at fund families can mean changes at your fund if your manager takes on new responsibilities or is otherwise distracted from running the fund that you own.
4.
A manager change at a fund is _______.
A warning sign that change may be on the way. Manager changes can lead to a drop-off in performance or a change in strategy, so theyre certainly warning signs. However, some types of funds handle manager changes better than others. As a result, a manager change isnt an automatic sell signal.
5.
A funds asset growth can lead to many problems. Which of the following is not typically one of them?
Higher expenses. As assets grow, expenses may decline. But performance may stall, and the funds manager may have to change his or her strategy to accommodate all that money.