What is generally a primary concern when managing a mutual fund's portfolio?

Ensuring diversification of assets is a primary concern when managing a mutual fund's portfolio because diversification helps to mitigate risk. By spreading investments across various asset classes, sectors, and geographic regions, fund managers can reduce the impact of poor performance in any single investment. This strategy is based on the principle that different assets often react differently to the same economic event. Therefore, a well-diversified portfolio can lead to more stable returns over time and is considered a fundamental aspect of sound investment management. By focusing on diversification, fund managers aim to achieve a balance that minimizes risks while still providing the potential for reasonable returns, which is essential for meeting the investment objectives of the fund’s shareholders.