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Funds 501: Avoiding Portfolio Overlap

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1.
If you own one fund run by Manager A, how many other funds of his or hers should you own if you value diversification?
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None. Managers generally have ingrained investment habits that they apply to every pool of money they run; they'll rarely use a growth strategy on one portfolio and a value strategy on another.
2.
Why is portfolio overlap a greater risk for fund investors who also own individual stocks?
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Because the investor's funds may also own this stock, making the investor's overall portfolio more concentrated than it seems. That means overlap.
3.
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.
4.
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.
5.
If you own a lot of growth funds, chances are you're overweight in what sector of the market?
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Technology. Current growth managers lean toward tech stocks.