How to distinguish active funds from passive funds?
1 has different names:
Judging from the name is the most intuitive method. Active funds and passive funds are not completely different in purpose and operation ideas.
The purpose of passive funds is to follow the trend of an index. Although there are broad-based index and debt-based index, they all choose stocks with a certain index, so those with index, ETF and ETF in their names are generally passive. Under normal circumstances, ETF funds are exchange-traded funds, which completely copy the trend of the index. We can buy and sell such funds from the secondary market.
2 Different investment objectives:
The investment target of a passive index fund is an index, and the fund manager generally configures it according to the constituent stocks of the target index and the preparation method, so as to track the target index and minimize the tracking error between the portfolio return rate and the index return rate.
The investment goal of active funds is directly determined by the investment style and concept of fund managers. Based on the research results of the whole investment and research system of fund companies, they actively choose stocks, so there is no fixed investment target.
3 Different positions have different flexibility:
With the fluctuation of the stock market, active foundations can change positions at any time, so their positions are more flexible. However, passive funds usually have to maintain high positions and cannot lighten their positions at will, which makes them less flexible, but also reduces the risk of operational errors.
4 different transaction costs:
In general, because active funds are more flexible in position management and are greatly influenced by fund managers, their redemption fees and management fees are usually higher than those of passive funds.
Four different income fluctuations:
The yield of active funds is closely related to the strength of the fund manager and the team behind him, while passive funds are often related to the index they track, and have little to do with the fund manager. Generally, broad-based index funds and the overall market income fluctuations are similar.
If you still can't distinguish between active and passive funds, you can also log on to some fund websites and judge by looking at the "fund type" of a fund. For example, if the fund type is marked with "stock index", it is a passive fund.