Passive Vs. Active Management
Determine if you want an actively or passively managed mutual fund. Actively managed funds have managers that make decisions regarding which securities and assets to include in the fund. Managers do a great deal of research on assets and consider sectors, company fundamentals, economic trends and macroeconomic factors when making investment decisions. Active funds seek to outperform a benchmark index, depending on the type of fund. Fees are often higher for active funds. Expense ratios can vary from 0.6 to 1.5%.