How does a large AUM potentially impact a mutual fund's performance? Option: It guarantees lower expense ratios for investors, It always leads to higher returns due to economies of scale, It may limit investment flexibility and make it harder to achieve high returns, It has no significant impact on the fund's performance

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How does a large AUM potentially impact a mutual fund's performance?

It guarantees lower expense ratios for investors

It always leads to higher returns due to economies of scale

It may limit investment flexibility and make it harder to achieve high returns

It has no significant impact on the fund's performance

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Which type of mutual fund is LEAST likely to be significantly affected by a large AUM?

Equity Funds

Large-cap Funds

Small-cap Funds

Debt Funds

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Why is it advisable to avoid investing in debt mutual funds with very large or very small AUMs?

"Large funds are not transparent, while small funds are not well-regulated"

"Large funds are too risky, while small funds offer low returns"

"Large funds face liquidity issues during redemptions, while small funds struggle to negotiate favorable rates"

"Large funds have high expense ratios, while small funds have limited diversification"

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What is the key factor that can be affected if the size of a mutual fund is too large or too small?

"Risk Reward Ratio"

"Expense Ratio"

"Tax Benefits"

"Fund's Performance"

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What is the relationship between AUM and expense ratio in mutual funds?

Higher AUM generally leads to a higher expense ratio

There is no direct relationship between AUM and expense ratio

Expense ratio is always fixed regardless of AUM

Higher AUM typically results in a lower expense ratio

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What does Asset Under Management (AUM) represent in the context of Mutual Funds?

The minimum investment required to participate in a mutual fund

The total cumulative market value of investments held by a mutual fund

The average return generated by a mutual fund

The number of investors in a mutual fund