Index funds tend to be more tax-efficient and have lower expense ratios than actively managed funds because they generally trade less frequently. Though they attempt to beat the market, these funds can also miss their goals, resulting in losses for the fund—and its investors.Are index funds really better than actively managed?
Returns: When holding time is as short as 3 years, index funds tend to give better returns than actively managed funds. Expense Ratio: Expense ratio of index funds are anyways low. If people can pick a direct plan, return of index funds (in a 3 year period) will be even better.What is the difference between mutual funds and index funds?
Mutual funds tend to have higher fees than index funds but, mutual funds basically do the same thing that an index does. That means that they are both diversifying your portfolio across hundreds of stocks. An index fund still diversifies you, but it tracks a very specific index.What are passively managed index funds?
Index Funds An index fund is a "passively" managed mutual fund that tries to mirror the performance of a specific index, such as the S&P 500 or the Dow Jones Industrial Average. Since index funds attempt to mirror a stock index, decisions about which stocks to buy and sell are automatic for the fund and transactions are infrequent.