Look beyond the story of a sector or thematic fund: test your skills
Funds built around one industry or trend concentrate risk. Popular themes can already be priced in. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Tell sector and thematic funds from broad funds
- Name their main risks
- Limit them to a deliberate slice if used
- Practice
1. A sector fund holds…
- Practice
2. A main risk of thematic funds is…
- Practice
3. A “core and satellite” approach keeps themes…
- Key idea
4. Which statement best explains "Stories sell funds"?
- Key idea
5. Which statement best explains "Narrow means volatile"?
- Key idea
6. Which statement best explains "Core and satellite"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
A theme fund is $3,000 of a $50,000 portfolio. Your cap is 5%. How much should you trim?
Show the answer
$500
Cap = $50,000 × 0.05 = $2,500. $3,000 − $2,500 = $500.
If you hold a sector or theme fund, calculate what share of your portfolio it is today.
More tests in this bootcamp
- See how compound interest builds over time
- Understand index funds, diversification and fees
- What is an ETF? Understand the basket behind a share
- Compare ETFs and mutual funds without the jargon
- Understand the S&P 500 and what it leaves out
- Explore total market funds and check the overlap
- Understand international diversification and currency risk
- Look beyond the story of a sector or thematic fund
- Understand a three-fund portfolio and rebalancing
- Learn dollar-cost averaging: a schedule instead of market timing
- Final exam: Funds and portfolios