Diversified vs. Non-Diversified Funds
A diversified fund has three primary rules to which it adheres:
- 75% or more of its assets are invested in securities
- No more than 5% of its assets are invested in any one security
- Contains no more than 10% of the outstanding shares for any one security
A diversified fund's objective can be varied, including growth, income, or a combination of both. A mutual fund's objective may be found in the prospectus.
- Any mutual fund that does not adhere to the above criteria.
A non-diversified mutual fund's objective may be found in the prospectus.
Diversification does not assure a profit, or protect against loss, in a down market.
Investors should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. A prospectus contains this and other information. A mutual fund prospectus is available through www.scottrade.com or through a Scottrade branch office. The prospectus should be read carefully before investing