What is the difference between active and passive mutual funds?
An example of an AI chatbot conversation about mutual fund strategies and their differences.
Can you explain the difference between active and passive mutual funds?
Sure! Active mutual funds are managed by professionals who make investment decisions to outperform the market, while passive mutual funds aim to replicate the performance of a specific index.
Which one is generally better for long-term investment?
It depends on your investment goals. Passive funds often have lower fees and can be more tax-efficient, while active funds may offer higher returns but come with higher costs.
What are the fees associated with each type?
Active funds typically have higher management fees due to the active management strategy, while passive funds usually have lower fees since they track an index.
Can you give me examples of each type?
Certainly! An example of an active fund is the Fidelity Contrafund, while a popular passive fund is the Vanguard 500 Index Fund.
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