Funds with low levels of diversification tend to "beat the market."

Question

Quizplus · Accepted Answer

Funds with low levels of diversification are considered riskier because they are not spreading their investments across different sectors or asset classes. This means that if one investment does poorly, the entire fund is more likely to suffer. Therefore, it is less likely for them to consistently "beat the market" in the long run. Funds with high levels of diversification tend to have more stable returns over time.

Funds with Low Levels of Diversification Tend to "Beat the Market