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1.
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?
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.
2.
To avoid overlap, how many large-blend funds should you own if you already have a large-value and a large-growth fund?
Maybe none. Because the large-cap universe is small, there's little need to own a large-blend fund if you already have funds from the large-value and large-growth categories.
3.
Why is portfolio overlap a greater risk for fund investors who also own individual stocks?
Because the investor's funds may also own this stock, making the investor's overall portfolio more concentrated than it seems. That means overlap.
4.
For purposes of diversification, which parts of the Morningstar Style Box should attract each other?
Opposite corners. Based on how the style box is structured, opposite corners will show the diversity.
5.
If you have a lot of diversity among individual stocks, what does that say about your diversity in particular sectors of the market?
It can't be determined. A diverse collection of stocks might actually share exposure to certain sectors. Tech is a good example of such a sector.
