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Explain three key differences between index funds and mutual funds

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The three main differences are management style, investment objective and cost — and index funds are the clear winner.

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The main difference between index funds and mutual funds is that index funds seek market-average returns whereas mutual funds tries to outperform the market.

What is index funds?

"Index funds are investment funds that follow a benchmark index, such as the S&P 500 or the Nasdaq 100."

What is mutual funds?

"A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. "

"If a mutual fund is active, then it has high fees than index fees."

"The performance of index fund is predictable whereas the performance of active mutual fund is not predictable."

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