Most mutual fund schemes diversify across stocks and sectors. But sometimes managers follow a concentrated strategy either due to a scheme’s mandate or because of the manager’s style. If these stock prices go up, the net asset value tends to rise sharply. But a concentrated portfolio can also backfire if the strategy goes wrong. Diversified funds, too, can hold a concentration of their larger holdings and a much more diversified portfolio among the smaller holdings.
Valuation swell prompts large balanced advantage funds to lower sails
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