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What Is a Capped Fund?

By Jeremy Bowman – Updated Nov 22, 2024 at 9:23AM

Key Points

  • Capped funds limit the expense ratio and individual stock holdings, ensuring predictable costs and diversification.
  • Investors must read fund prospectuses to grasp specific capped fund rules, as expense caps can expire.
  • Though capped funds control fees, they may underperform non-capped funds that allow managers more operational freedom.
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