ACTIVELY MANAGED EQUITY MUTUAL FUNDS

 

Actively managed equity mutual fund is a equity oriented mutual fund which actively managed by a team of professional. In an actively managed mutual fund, fund manager along with his/her team makes decisions about how to invest the funds corpus, which stocks to buy/sell and what should be the percentage of each stock in portfolio. In contrast, a passively managed fund tracks a market index , like nifty 50, and holds stocks in the same proportion as the index. The scheme merely mimics the index with a low tracking error and does not make any buy or sell decision.

Since a actively managed fund managed by a team of expert professional such scheme charge higher than their passive counterparts. the charges made by such fund known as expense ratio. Expense ratio consist of fund manages fees, legal audit fees, registrar and marketing and distribution fees. The direct plan will not charge distribution fees, while regular plan will do that. The expense ratio reduces with the increase in the corpus of the scheme. The upper limit is 2.25%.In line with SEBI regulations, a fund house can have one actively managed equity scheme in each category.