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Funds 403: Using Focused Funds

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1.
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.
2.
What criteria determine whether a fund is "focused"?
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All of the above. A fund can be considered focused if it fits any of these criteria.
3.
Which of the following should you expect when you invest in a focused fund?
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Occasional short-term volatility. While a focused fund may have an inexperienced manager or high expenses, investors should almost always expect some short-term volatility.
4.
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.
5.
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.