Diversification obtained within an indexed mutual fund can protect investors from losses during an economic downturn.

Question

Quizplus · Accepted Answer

Diversification within an indexed mutual fund can reduce specific risks associated with individual investments, but it does not protect investors from market-wide losses during an economic downturn, as the fund's performance is tied to the performance of the index it tracks, which may decline during such periods.

Diversification Obtained Within an Indexed Mutual Fund Can Protect Investors