Can someone please explain what Diversified mutual funds are.?
It is a misnomer that all mutual funds are diversified. In fact, diversification is a double edged sword. On one side it can reduce the over all risk if properly balanced. On the other side it can limit growth potential due to investing in lower risk assets. How one should invest has to due with many factors including age, goals, time frame, assets, liabilities, etc. Discussed here: http://answers.yahoo.com/question/index;… I have argued in my career that the largest mutual funds will tend to look like the S&P 500 Index, but those funds will frequently underperform the index over time. This is not about diversification as it is about that a large funds can’t enter or exit the market with billions in buy/ sell orders and not impact the bid. So large funds mirror the indexes, or attempt to. My argument is why not just own the indexes that
