Posted on January 4, 2012 | Classroom
What to Look for: Well, the example is not a sector fund concentrating in one or a few closely allied industries. The fund’s strategy is to be diversified by firm and industry—a less risky approach than sector concentration. The option of holding debt securities is no surprise, since stock funds do hold cash but rarely move significantly into bonds. But where did foreign securities come in? The trend among managers of domestic equity funds is to have and use the flexibility to invest overseas. While not operating as a global fund, significant foreign holdings of up to 25% of the portfolio are not uncommon.