{"id":11747,"date":"2022-05-24T15:00:48","date_gmt":"2022-05-24T09:30:48","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=11747"},"modified":"2023-01-23T15:19:47","modified_gmt":"2023-01-23T09:49:47","slug":"active-funds-and-passive-funds","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/active-funds-and-passive-funds\/","title":{"rendered":"Active funds and Passive funds"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69d3567bef33c\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69d3567bef33c\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/active-funds-and-passive-funds\/#Active_Funds\" title=\"Active Funds:\">Active Funds:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/active-funds-and-passive-funds\/#Passive_Funds\" title=\"Passive Funds:\">Passive Funds:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/active-funds-and-passive-funds\/#Which_one_to_choose_-_active_funds_or_passive_funds\" title=\"Which one to choose &#8211; active funds or passive funds?\">Which one to choose &#8211; active funds or passive funds?<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/active-funds-and-passive-funds\/#Interested_in_how_we_think_about_the_markets\" title=\"Interested in how we think about the markets?\">Interested in how we think about the markets?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<div>\n<p>Welcome to our Investor Education Originals series. In this video, let&#8217;s get to know Mutual Funds better. We will understand the difference between Active Funds and Passive Funds, and how to choose one.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8220;Mutual funds sahi hai,&#8221; we have heard this enough, but how do we know which mutual fund is the best? We&#8217;ll learn about the two types of mutual funds to make more informed MF investments.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<p><iframe loading=\"lazy\" title=\"Active funds vs Passive funds | How to choose an MF scheme\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/IYrtZnfH58U?list=PLDSzQdT9nLmBFD2p94O5p2pZ4vEUR-Thz\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<div>\n<p>The entire MF universe is divided between two types of <a href=\"https:\/\/kuvera.in\/explore\/mf\/c\/all\">mutual funds<\/a> \u2013 active funds and passive funds. Fund manager plays an important role in active funds whereas they have to do the bare minimum in passive fund schemes.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Active_Funds\"><\/span>Active Funds:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Every mutual fund scheme has one or two fund managers who select and deploy funds. When fund managers do active research to select stocks, that mutual fund scheme is called Active MF scheme. And since the fund manager plays a major role, the fund management fees are also high, and so is the expense ratio of that scheme. The major goal of an Active MF scheme is to generate alpha, which means generating more returns from broader markets.<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\"><img loading=\"lazy\" class=\"alignnone size-large wp-image-11416\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/05\/Kuvera-FD-Banner-1-1024x334.jpeg\" alt=\"fixed-deposit-kuvera\" width=\"640\" height=\"209\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/05\/Kuvera-FD-Banner-1-1024x334.jpeg 1024w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/05\/Kuvera-FD-Banner-1-300x98.jpeg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/05\/Kuvera-FD-Banner-1-768x250.jpeg 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/05\/Kuvera-FD-Banner-1.jpeg 1080w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<div>\n<h3><span class=\"ez-toc-section\" id=\"Passive_Funds\"><\/span>Passive Funds:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Passive, as the name suggests, requires passive treatment by fund managers. They are also known as index funds. Passive funds or index funds are those that invest in the same companies that constitute an index. For example, the Nifty50 index fund invests in the 50 companies of the Nifty50 index invests. Since the fund manager himself is now selecting or deploying the funds, these funds are called passive funds. And hence, the expense ratio of an index fund is also lower. Passive funds earn nearly the same as what the underlying index earns. You generate average market returns by investing in passive funds.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Which_one_to_choose_-_active_funds_or_passive_funds\"><\/span>Which one to choose &#8211; active funds or passive funds?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If you do not have the time and resources to select stocks or mutual fund schemes by yourself, you can simply choose different categories of index funds and create a diversified portfolio. Index funds help in DIY investing. If you are okay to pay a higher commission and let the fund managers invest in broader markets for extra returns, you can invest in active funds. However, do take the help of an investment advisor or mutual fund distributor while selecting active MF schemes.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<p>&#8212;&#8212;&#8211;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Interested_in_how_we_think_about_the_markets\"><\/span>Interested in how we think about the markets?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Read more: <a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Check out all our &#8220;Investor Education Originals&#8221; videos on Youtube and get smart about investing.<\/p>\n<p><iframe loading=\"lazy\" title=\"Fixed Deposits | A must-have in your investment portfolio\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/UsPIJ1zE4lk?list=PLDSzQdT9nLmBFD2p94O5p2pZ4vEUR-Thz\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit <a href=\"https:\/\/www.kuvera.in\/\"><strong>kuvera.in<\/strong><\/a> to discover <a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"><strong>Direct Plans<\/strong><\/a> and <strong><a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a><\/strong> and <a href=\"https:\/\/kuvera.in\/user\/login\"><strong>start investing today.<\/strong><\/a><\/p>\n<p>#MutualFundSahiHai #KuveraSabseSahiHai #PersonalFinance #InvestorEducation<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Welcome to our Investor Education Originals series. In this video, let&#8217;s get to know Mutual Funds better. We will understand the difference between Active Funds and Passive Funds, and how to choose one. &nbsp; &#8220;Mutual funds sahi hai,&#8221; we have heard this enough, but how do we know which mutual fund is the best? 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