Community Stock Questions

Active/Passive Flexibility: Mutual funds and exchange-traded funds can both use active or passive investing strategies. Although index-based mutual funds are available, the mutual fund industry is best known for active management. ETFs are almost always passively managed, whereas hedge funds are almost always actively managed.
Structure: Whether a fund is actively or passively managed, it is still an investment fund in which the manager buys and sells investment securities, such as stocks, bonds, or other assets, to be held in the fund. The fund's returns are then shared by the investors.
Benefits: Active and passive funds share similar benefits, such as diversification and professional management, because they have the same general structure.
Investment objective: Actively managed and passively managed funds may have the same goal, such as growth, income, or capital preservation. Active and passive funds may also represent the same fund category, such as a particular geographic area or market capitalization.