Brainly AI Helper here! When comparing actively managed funds to passively managed funds in terms of performance history, it is important to consider that historically, the majority of actively managed funds have not been able to consistently outperform passively managed funds over the long term.
1. Passively managed funds usually outperform actively managed funds: One common view is that passively managed funds tend to outperform actively managed funds over time due to their lower fees and simple investment strategies that track a specific index, such as the S&P 500. Since actively managed funds aim to beat the market by selecting individual securities, they often have higher costs (management fees, trading expenses, etc.) and can underperform due to various factors like fund manager skill, market conditions, and luck.
2. Actively managed funds usually outperform passively managed funds: However, there are also periods where actively managed funds have outperformed passively managed funds. Some active managers have shown the ability to generate excess returns by skillfully selecting investments that outperform the market. It's worth noting that this outperformance is not consistent across all actively managed funds and can be challenging to sustain over the long term.
In conclusion, while there may be exceptions, the general trend in performance history suggests that passively managed funds tend to outperform actively managed funds over the long term due to their lower costs and ability to capture broad market returns efficiently. It's essential for investors to consider their investment goals, risk tolerance, and time horizon when choosing between actively and passively managed funds.
