An Actively managed fund is a scheme monitors stocks, makes buy or sell decisions on each stock, and determines their weight in the portfolio according to the scheme's goals.
Passive funds are investment schemes designed to track a benchmark index and replicate its performance. These include passive index funds, exchange-traded (Fs), and fund of funds (FoF) that may invest in ETFs. These funds adhere to a benchmark and aim to deliver returns in line with the benchmark, subject to expense ratios and errors.
Passive funds are ideal choice for investors seeking a low-cost option, who prefer stability in their portfolio and are satisfied with returns that reflect the market.
Roughly, passive funds are 0.8% cheaper than active funds.