Are ETFs actively or passively managed?
Exchange-Traded Funds (ETFs) can be both actively and passively managed, depending on how they are structured.
Passively managed ETFs are the most common. These funds aim to replicate the performance of a specific index, such as the Nifty 50 or Sensex. They do this by holding the same stocks in the same proportion as the index. Because there's no frequent buying or selling by a fund manager, these ETFs generally have lower fees.
Actively managed ETFs, on the other hand, have fund managers who make regular decisions about what to buy or sell in an attempt to outperform the market.
These may have slightly higher costs due to active research and trading.
For most investors, passively managed ETFs are a popular choice for long-term investing due to their simplicity, transparency, and lower costs.
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