Final answer:
An agency fund often has small net position balances because it acts as a custodian for the assets of others.
Step-by-step explanation:
An agency fund is a type of fund used by government entities or non-profit organizations to account for resources that are held in a purely custodial capacity, with the organization acting as a trustee or custodian for the assets of others. These funds often have relatively small net position balances because the agency fund does not retain earnings or accumulate resources for its own use. Instead, it simply reports the assets and liabilities of the individuals or organizations for whom it is holding the resources. Therefore, the statement 'It is common for an agency fund to have relatively small net position balances' is true.