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Funds 501: Avoiding Portfolio Overlap

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1.
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.
2.
For purposes of diversification, which parts of the Morningstar Style Box should attract each other?
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Opposite corners. Based on how the style box is structured, opposite corners will show the diversity.
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.
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.
5.
If you own one fund from a boutique fund family, how many other funds should you own from that same family if you value diversification?
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None. If you own more than one fund run by a boutique or specialist shop, chances are you own two (or more) of the same thing. Boutiques focus on what they do best, and as a result owning more than one of their funds often results in overlap.