Active fund
Also called: actively managed fund, active management
A fund whose manager tries to beat a benchmark index by choosing investments or timing, usually at higher cost than an index fund.
Before costs, active investors as a group earn roughly the market return; after their higher costs, the average active fund trails. Studies have generally found that most active equity funds underperform their benchmarks over long periods, and that top performance rarely persists.
Learn more in these lessons
- Active and passive fundsShould you choose an actively managed fund or an index fund?
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