What is Active and passive managed mutual funds
Some investment funds are managed according to the active strategy, where the goal is to create a return on a par with or better than the market. Other funds are managed according to the passive strategy, where the goal is to perform as the market according to cost. There are pros and cons to both strategies.
What is Active managed Mutual funds:
In an actively managed investment fund, the association puts the investments together based on its expectations for economic development, the companies’ earnings, interest rate developments, demand, etc.
The goal is to deliver a return after costs – an economic profit – that is higher than or on a par with the development in the benchmark. A benchmark is an index that measures the average price development in a stock or bond market. It can e.g. be the Danish stock market or the entire global stock market.
What is Passive managed mutual funds:
In a passively managed fund, the association puts the investments together so that the fund’s return closely follows the development in a specific index. The goal is to keep costs down and deliver a return – an economic result – that equates to the market average minus costs. The market can e.g. be the Danish stock market or the entire global stock market. Market development is measured via a benchmark. A benchmark is an index that measures the average price development in a stock or bond market. It can e.g. be the Danish stock market or the entire global stock market.