What are Managed Funds?

Managed funds are a type of mutual fund with investments invested in different types of securities. There are  two general types of managed funds, actively managed funds and passively managed funds.

Actively managed funds involve a fund manager researching, analyzing the performance and actively tweaking the fund so it can perform at its highest potential. Managed funds are established and constructed in hopes that the returns they generate will be larger than the performance of the investment benchmark index indicators. Although they are different from each other for several reasons, both hedge funds and mutual funds have people responsible for their performance, thus making them both actively managed funds.

Passively managed funds, where the goal is not to outperform the benchmark index but just match the rate of return of the market trend. Passively managed funds are investments approached with more of a “hands off” approach, meaning the fund manager does little to tweak or adjust the investment once the ball gets rolling. The less the managed fund is adjusted, the better it may be for investors who are concerned with transaction fees.

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