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Funds 403: Using Focused Funds

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1.
A fund that holds only 5 stocks could be considered a focused fund.
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True. As a rule, a focused fund holds fewer than 40 stocks.
2.
Which of the following would not qualify as a focused fund?
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A fund that has the exclusive attention of its manager. A focused fund owns a few stocks, invests a lot of its assets in its top-10 stocks, or both. One that has a manager's devoted attention is not necessarily a focused fund.
3.
Which is the biggest benefit of buying a focused fund from an established and reputable fund family?
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They will probably intervene if the fund underperforms over a long period of time. Established and well-respected fund families are most likely to step in if a fund is dramatically underperforming its peer group, at least partially to protect its good name.
4.
Which focused fund should you be wary of?
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A fund with a 2% expense ratio. A focused fund with expenses higher than 2% should be regarded with suspicion.
5.
As a general rule, a "focused fund" would hold _______ stocks.
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Fewer than 40. There is no precise number, but this is a general rule.