Passive Fund or Passively Managed Fund
A passive fund is a mutual fund , exchange-traded fund (ETF), or unit investment trust (UIT) that follows an investment strategy designed to achieve approximately the same return as a particular index before fees.
Concept at a glance
Definition and explanation
A passive fund is a mutual fund , exchange-traded fund (ETF), or unit investment trust (UIT) that follows an investment strategy designed to achieve approximately the same return as a particular index before fees. [1]
Passively managed mutual funds, ETFs, and UITs are also called index funds. An index fund will attempt to achieve its investment objective primarily by investing in the securities (stocks or bonds) of companies that are included in the selected index. [1]
Passive management usually translates into less trading of the fund’s portfolio (lower transaction costs), more favorable income tax consequences (lower realized capital gains), and lower fees and expenses than actively managed funds. Over time, higher fees and expenses can significantly lower investment returns. [1]
Source-supported connections
Frequently asked questions
What does Passive Fund or Passively Managed Fund mean in the cited reference?
A passive fund is a mutual fund , exchange-traded fund (ETF), or unit investment trust (UIT) that follows an investment strategy designed to achieve approximately the same return as a particular index before fees. [1]
Passive Fund or Passively Managed Fund connection map
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Sources and review dates
Reviewed 23 October 2026. Historical dates and award-time affiliations retain their original context. A review date is not an event date. Background sources are identified separately from official records.