Passive fund is a kind of fund corresponding to active fund. Passive funds generally track the performance of a specific index. Passive funds are also called index funds.
From the perspective of income, domestic market data show that in the past decade, the income of stock funds and partial stock mixed funds is higher than that of index funds, that is, the income of active funds is higher than that of passive funds.
Active funds have larger and more flexible income space, especially flexible allocation funds, which can increase stock positions to obtain excess returns in good times and reduce stock positions to reduce investment risks in bad times.
The number and types of active funds are more, which are more suitable for asset allocation and can meet the all-round investment needs of investors.
Passive funds are less influenced by fund managers, with more stable returns and lower risk coefficient. Passive funds can, to a certain extent, avoid the mistakes of subjective choice caused by ability differences and emotional influence. Passive funds are sustainable, because the constituent stocks of index funds will be adjusted regularly, and unqualified targets will be eliminated and new targets that meet performance will be included, so they will continue to exist and will not die out. The cost of passive funds is lower, the average management fee of passive index funds is 0.53%, and the average management fee of active funds is 1.45%, which can save more costs in trading.
From the perspective of fixed investment, both types of funds are suitable for fixed investment, but they need to be selected and configured according to their own risk preferences.