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Funds 210: Your First Fund

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1.
Which is not a reason for buying your first fund through one of the big fund families?
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Because their funds are always the best performers. Most of the big fund families are reliable and offer a wide range of solid funds--but they aren't always chart-toppers.
2.
Why might a concentrated fund not be a wise idea for a beginning investor's first fund?
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They tend to be more volatile than well-diversified funds. As a rule, beginning investors might find well-diversified funds more suitable because they are less volatile.
3.
Why might your first fund be one that favors large companies?
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Because these funds tend to be less volatile than funds owning smaller companies. Funds that own large companies, in general, may not be higher returning or cheaper, but they tend to be steadier investments than those owning smaller companies.
4.
Beginning investors might be well served by large-cap funds over smaller funds. Large-cap funds contain the stocks of _______.
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Large companies. The term "large-cap" refers to large companies.
5.
Which type of large-company fund generally makes the best first fund?
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Large blend. Blend funds own stocks with both value and growth characteristics and typically don't favor particular sectors over others. They therefore offer more diversification than most large-value or large-growth funds do.