Active vs passive investing Which one actually performs better? #investing

When you’re comparing ETFs and managed funds, one of the biggest decisions is choosing between active and passive investing.

Active funds are professionally managed. The fund managers are buying and selling businesses every day, deciding when to exit a company and when to replace it. This hands-on approach aims to outperform the market, but it also comes with higher fees.

Passive funds are simple. They track an index like the ASX 200, meaning you’re invested in the top 200 companies in Australia. There’s no daily decision-making, no active management and usually much lower fees.

Historically, only a small group of active managers consistently outperform the index. Their fees can be four to five times higher, so you need to make sure the performance justifies the cost.

There is no right or wrong style. It comes down to what you want, what you value and whether the manager’s track record is worth the extra fee.

#finance #investing #australianfinance #australianbusiness #wealthplanning #financialadvice

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