Actively managed fund

An actively managed fund is a pooled investment, such as a mutual fund or an exchange-traded fund, in which a manager (the fund's investment adviser) decides which stocks or bonds the fund buys and sells. The aim is usually to beat an index, a published measure of a slice of the market such as the S&P 500. These funds generally charge a higher expense ratio, the yearly fee taken out of the fund's assets, than funds that simply copy an index.

If a fund charges 0.75 percent a year, you pay about $7.50 a year for every $1,000 you have in it, in good years and bad, though you never see a bill. The higher fee buys effort, not results: an active fund can trail the index it is compared against, and it loses value when its holdings fall.