Managers of actively managed mutual funds buy and sell investments to achieve a particular goal, such as providing a certain level of return or beating a relevant benchmark.
As a result, they generally trade much more frequently than managers of passively managed funds whose goal is to mirror the performance of the index the fund tracks.
While actively managed funds may provide stronger returns than index funds, they often have higher management fees and provide more taxable income.
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- Audit committee, Buy side, Enhanced index fund, Institutional investor, Managed account, Management fee, Money manager, Passively managed, Portfolio manager, Prudent man rule, Wrap account
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