Funds Intermediate: Fund Warning Signs

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1.
If a mutual fund starts out as a small-cap fund, it may eventually become a mid-cap or large-cap fund.
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True. Some funds change their focus years later.
2.
A funds asset growth can lead to many problems. Which of the following is not typically one of them?
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Higher expenses. As assets grow, expenses may decline. But performance may stall, and the funds manager may have to change his or her strategy to accommodate all that money.
3.
As funds grow, how do managers often change their strategies?
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They buy more stocks. To accommodate asset growth, some fund managers will buy more stocks, buy larger companies, or trade less.
4.
A funds performance can be affected when new funds are added to the family it belongs to.
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True. Sometimes, a fund will lose its focus or change its role within the fund.
5.
Why is it important to monitor your fund families?
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Both of the above. Changes at fund families can mean changes at your fund if your manager takes on new responsibilities or is otherwise distracted from running the fund that you own.