Weatherford correctly describes a completion fund. In a completion fund, the individual invests in a target portfolio that excludes firms in her current stock’s industry. The target portfolio provides for diversification. Weatherford is incorrect, however, in describing an advantage of a completion fund. To raise the funds to invest in a completion fund, the individual borrows funds against his or her stock or uses the dividends from his or her current stock. In the former case, the increased leverage increases the investor’s risk. In the latter case, obtaining the funds necessary to invest in the completeness fund may take substantial time |
