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Funds 501: Avoiding Portfolio Overlap

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1.
If you have a lot of diversity among individual stocks, what does that say about your diversity in particular sectors of the market?
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It can't be determined. A diverse collection of stocks might actually share exposure to certain sectors. Tech is a good example of such a sector.
2.
What do boutique funds do?
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Specialize in one thing. A boutique fund will specialize in one thing, whether it is an investment objective, a part of the world, or some other aspect of investing.
3.
For purposes of diversification, which parts of the Morningstar Style Box should attract each other?
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Opposite corners. Based on how the style box is structured, opposite corners will show the diversity.
4.
In the Morningstar Style Box, which square would provide diversification to a large-growth fund?
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A small-value fund. The corners are the areas that show where diversification would be. A small-value fund would therefore offer the most of that.
5.
To avoid overlap, how many large-blend funds should you own if you already have a large-value and a large-growth fund?
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Maybe none. Because the large-cap universe is small, there's little need to own a large-blend fund if you already have funds from the large-value and large-growth categories.