Originally Posted by modhatter
Do they do any re balancing of the individual stocks in the fund?..
That depends on the fund, but generally unless a fund declares itself an index fund, the manager does sell what he thinks will not go up more, and use the proceed to buy something else that he thinks has a better prospect. So, the answer is "Yes, for an active fund".
For example, let's look at Wellington because that is currently a hot topic here in this forum. Look on the Web, and you'll see that Wellington has a portfolio turnover of 30%. This means over 1 year, they sell and buy (trade) about 30% of their holdings.
Some funds like Dodge & Cox have a lower turnover of 15%. On the other hand, some of the so called "growth" funds have turnovers approaching 100%, as the managers want to chase hot stocks.
As an example of what Wellington bought and sold, the latest data in March 2013 showed that it was decreasing its holding in Pfizer, and increasing the holding in Wells Fargo.
Note that MFs and holding corps like Berkshire Hathaway only report on what they have already done, not what they are doing or plan to do. They would not want to reveal it, because competitors would try to get in before they do and bid the price way up.
I hope the above helps.
PS. When you buy an active fund, you are trusting the MF manager to do the right thing for you. Or rather, that he will do better than you can yourself. That's the bottom line.