DelhiDesk Investors often struggle with choosing between active and passive mutual funds. Active funds aim to outperform their benchmark index through professional fund managers’ expertise, while passive funds aim to replicate a specific index’s performance. While some studies have shown that passive funds tend to outperform actively managed funds in the long term due to lower fees and reduced portfolio turnover, there are instances where skilled active managers can consistently beat the market. Passive funds tend to have lower expense ratios, offer diversification, and maintain broad exposure to the entire market, leading to lower levels of risk. However, active managers may have more opportunities to add value through stock selection and tactical asset allocation during high market volatility or low stock correlations. Experts suggest having an allocation in both funds.

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Here is the news bullets sorted by DelhiBreakings.com team.

👉Making an investment choice can be tricky for investors due to a plethora of investment options available in the market.
👉When investing in mutual funds, investors get confused about whether to invest in an active or passive fund.
👉Experts suggest having an allocation in both active and passive funds.
👉Actively managed funds aim to outperform their benchmark index, while passive funds seek to replicate the performance of a specific index.
👉Over the long term, passive funds tend to outperform actively managed funds due to their lower fees and reduced portfolio turnover.
👉Passive funds have lower expense ratios compared to actively managed funds, resulting in lower costs and higher total returns over time.
👉Both active and passive funds offer diversification, but their approaches to risk management can differ.
👉The relative performance of active and passive funds can be influenced by market conditions.

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