Funds Intermediate: When to Sell a Fund

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1.
In a mutual fund, style shift _______.
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Sometimes indicates a change in strategy. Funds can change styles without a strategy change. A manager may buy small-cap stocks, for example, but hold onto them as they grow into large-cap names. Thus, a small-cap fund may shift into a mid-cap fund without a full-blown strategy change.
2.
As your financial goals change throughout life, what should happen with your mutual funds?
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They should probably change too. At the very least, it's a good idea to make sure that they can meet your financial goals.
3.
Before cutting an underperforming fund, check its _______.
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Three-year return against an appropriate index and its peers. Give funds a few years before cutting them loose, and be sure to compare them with appropriate benchmarks.
4.
If you began investing for retirement and now your goal is to buy a home in two years, _______.
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You may need to sell some of your aggressive funds. If your goals change, your portfolio should, too. Since you're now planning for a shorter-term goal, you may need to sell some of your aggressive funds and become more conservative.
5.
What is not a good reason to consider selling a fund?
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It performs just as you expect. If a fund loses or gains more than it should, it may be taking on risks that you didn't think it took. It may therefore be an inappropriate investment for you.