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Funds 210: Your First Fund

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1.
Why could it be a bad idea to buy a single-sector fund as your first fund?
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Such funds are volatile. Funds focusing on only one area of the market are not necessarily poor performers or more expensive, but they tend to be less stable than funds owning stocks from various industries.
2.
Big fund families generally offer a range of funds to choose from.
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True. Though it's not guaranteed, as a general rule big fund families do offer a range of funds.
3.
Which is not a reason for buying your first fund through one of the big fund families?
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Because their funds are always the best performers. Most of the big fund families are reliable and offer a wide range of solid funds--but they aren't always chart-toppers.
4.
Which type of large-company fund generally makes the best first fund?
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Large blend. Blend funds own stocks with both value and growth characteristics and typically don't favor particular sectors over others. They therefore offer more diversification than most large-value or large-growth funds do.
5.
Because fund families tend to have a lot of funds in them, you are assured of finding plenty of diversity to choose from.
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False. Many fund families specialize in one type of fund, for example, large-growth funds. A big family isn't always a guarantee of diversity.