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1.
What is not something funds typically do to handle asset growth?
Own fewer stocks. Funds can close or change their strategies when faced with too many assets, or the fund managers may hold cash or buy more stocks.
2.
Due to their sheer size, large funds tend to be the most threatened by asset growth.
False. Because large-cap stocks account for the lion's share of the market's value, funds that focus on such names tend to be less affected by size than smaller-cap-focused funds.
3.
Which type of fund tends to be the most threatened by asset growth?
High-turnover small-growth funds. Because large-cap stocks are more liquid and account for the lion's share of the market's value, funds that focus on such names tend to be less affected by size than smaller-cap-focused funds. Low-turnover funds incur lower trading costs and are more affected by asset growth than fast-trading ones.
4.
How do you calculate a fund's asset size?
Multiply the fund's net asset value by the number of shares outstanding. This is how you determine the asset size.
5.
Why is a large mutual fund's asset size most likely to be in the form of large-cap companies?
Large-cap funds make up the majority of the size of the market. Large cap funds make up about two thirds of the market.
