Part 5/8:
While mutual funds may seem similar to index funds, they differ primarily in their management style. These funds are generally actively managed, meaning professional managers make ongoing decisions about which assets to buy and sell in an effort to outperform market benchmarks. However, this management style comes at a cost, with fees often ranging from 0.5% to 1.5% or higher.
Many investors choose mutual funds for specific sector exposure or the strategies employed by fund managers. Like index funds, trades are executed at the end of the trading day, and investors can place orders anytime.