What is the difference between an actively managed fund and an index fund?
In an actively managed fund, a fund manager tries to outperform similar funds or an appropriate market benchmark. To do this, managers use research, market forecasts, and their own judgment and experience to buy and sell securities. Index funds, sometimes called “passively” managed funds, don’t try to beat the market. Instead, managers of index funds seek to closely track the performance of a target market index. Index funds buy and hold all, or a representative sample, of the securities in the index.
