15. Active vs. Passive
L1 17 Active Vs Passive V2
Active vs. Passive Funds
Actively Managed Fund: seeks to outperform its benchmark (such as an index).
Passively Managed Fund: seeks to track its benchmark (such as an index).
Note: passively managed funds that track an index are also referred to ask “index funds”. An index fund is a fund, not an index.
L1 18 Alpha And Beta V3
Alpha vs. Beta
Actively Managed funds are also referred to as “alpha” funds.
Passively Managed funds are likewise referred to as “Beta” funds.