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Funds 403: Using Focused Funds

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1.
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.
2.
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.
3.
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.
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.
In terms of risks and rewards, investing in a focused fund is similar to investing in _______.
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A basket of individual stocks. Owning a focused fund is most similar to owning a bunch of individual companies. Index funds tend to be broadly diversified reflections of a major market index. Fixed-income funds invest in bonds.