Active and Passive Equity Funds

Active and Passive Equity Funds mind map
Context
Active equity funds
higher net inflows than passive
in Q2 FY24
Equity fund definition
mutual fund investing in stocks
high risk for long-term
substantial returns over time
categorized by company size
small-cap
mid-cap
large-cap
Mutual fund operation
collects money from investors
invests in securities
debt
equity
both debt and equity
Active Equity Funds
manager's role
active in stock selection
expense ratios
higher due to active management
portfolio management
driven by various strategies
trading frequency
higher
capital gains tax
higher if held under 1 year
returns
relatively higher
applicability
for alpha generation favouring investors
examples
ELSS Equity Linked Saving Scheme
Passive Equity Funds
manager's role
passive tracking of index
expense ratios
lower due to passive management
portfolio management
driven by benchmark index
trading frequency
lesser
capital gains tax
lesser if held under 1 year
returns
typically lesser
applicability
for market index allocation seekers
examples
Index mutual funds
Exchange-Traded Funds ETFs
Expense ratio explained
annual maintenance charge
finances fund expenses
operating costs
management fees
allocation charges
advertising costs
Capital gains taxes
owed on investment profits
if held for at least 1 year

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