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The returns on the Bledsoe Small-Cap Fund are the most volatile of all the mutual funds...

The returns on the Bledsoe Small-Cap Fund are the most volatile of all the mutual funds offered in the 401(k) plan. Why would you ever want to invest in this fund? When you examine the expenses of the mutual funds, you will notice that this fund also has the highest expenses. Does this affect your decision to invest in this fund?

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Answer #1

Investing is a matter of choice, we can either choose to invest in a more "volatile" fund or take less risk, it's all based on the individual's risk tolerance. A conservative investor may not choose to invest the Bledsoe Small-Cap fund, while a riskier investor can tolerate the risk and may invest with an assumption that higher risk equals higher returns.The portfolio allocation I would choose would be diversified and would include most of the funds but with very little allocated to company stock. As a rational investor, I would want to invest my portfolio above the minimum-variance point, and hence hopefully receiving a higher rate of return.

Please do rate me and mention doubts, if any, in the comments section.

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