| A collective fund that tracks rather than trying to beat the index by investing in companies in accordance with the constituents of an index. The managers of the fund have far lower expenses, and the charges to investors are lower than for active funds. Active funds aim to outperform the market average by seeking out stocks that will provide superior total return using research and analysis. Advocates of passive funds note that many actively managed funds fail to match the index, let alone beat it. Advocates of active funds argue that the more investors there are investing in index funds, the more opportunity there is for active investors to be selective and invest in outperforming shares.
|
