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Which type of mutual fund has higher expense ratios? Group of answer choices actively managed funds...

Which type of mutual fund has higher expense ratios?

Group of answer choices


actively managed funds
index funds
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Answer #1

Actively managed mutual funds will have higher expense ratios. In an actively manged fund, the management constantly makes decisions to beat the market returns. There will be a lot of buying and selling involved in actively manged funds and hence the expense ratios will be higher.

The index funds, on the other hand, are passively managed and there will not be any management looking after the fund. The index funds just tracks the performance of the index and hence the expense ratios will be lower.

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