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.
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.
3.
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.
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.
Which government source provides you with information on funds?
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Securities and Exchange Commission. The Securities and Exchange Commission provides the EDGAR database of information on funds.