Active Fund or Actively Managed Fund
An active, or actively managed, mutual fund or exchange-traded fund (ETF) follows an investment strategy that relies on the skill of an investment adviser to construct and manage its portfolio in an effort to provide exposure to certain types of investments or outperform an investment benchmark or index.
Concept at a glance
Definition and explanation
An active, or actively managed, mutual fund or exchange-traded fund (ETF) follows an investment strategy that relies on the skill of an investment adviser to construct and manage its portfolio in an effort to provide exposure to certain types of investments or outperform an investment benchmark or index. [1]
This means that an adviser of an actively managed fund may buy or sell investments in the portfolio without regard to conformity with an index. But the investments must be consistent with the overall investment objective and strategies of the fund. The performance of an actively managed fund is heavily dependent on the skill of the manager, along with other economic factors. [1]
Actively managed funds historically have had higher management fees than passively managed funds. Over time, higher fees and expenses can significantly lower investment returns. In addition, more active management of portfolio assets often leads to higher turnover costs (the costs of buying and selling investments in the portfolio) and potentially negative federal income tax consequences. [1]
Before investing in an actively managed fund, you should carefully read the fund’s available information , including its prospectus and most recent shareholder report. [1]
Source-supported connections
Frequently asked questions
What does Active Fund or Actively Managed Fund mean in the cited reference?
An active, or actively managed, mutual fund or exchange-traded fund (ETF) follows an investment strategy that relies on the skill of an investment adviser to construct and manage its portfolio in an effort to provide exposure to certain types of investments or outperform an investment benchmark or index. [1]
Active Fund or Actively Managed Fund connection map
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Links retain their source-specific meaning. Award-time affiliations and links to related reading are not claims about current appointments or economic causation.
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.