3 Benefits of an Actively Managed Fund

The debate between active or passive funds has become religion. Many indexers argue that actively managed funds are almost assured to underperform and carry higher expenses, which make them one of the worst ways to invest.

In truth, there is a little more nuance than "active is bad" and "passive is good." To be sure, passive funds have their benefits, but active funds can have their advantages, too.

Passive funds typically employ rules-based investment strategies in which investments are effectively picked by a checklist. These rules generally work, but when everyone rushes into one popular trade, it can create some imbalances that wouldn't necessarily happen if passive funds played a smaller role in the market.

Source: Fool.com