Generally speaking, you will find lower fees (also known as expense ratios) from index mutual funds. Actively managed funds require portfolio managers and analysts to research stocks, bonds and other investments in order to fill out portfolios. That type of research comes at an additional cost. However, a passively managed fund can simply replicate its chosen benchmark without the manual intervention.
Index funds have continued to gain popularity due to their low-cost structure. Today, there are low-cost index funds for virtually every sector and asset class.
Vanguard 500 Index Fund Admiral Shares
Vanguard is one of the originators of the index fund concept, and the Vanguard 500 Index Fund is the largest.
This fund simply replicates the performance of the Standard & Poor's (S&P) 500 Index and currently has one of the lowest expense ratios out there, at just 0.07%. For every $10,000 invested, the fund would charge an investor just $7 annually.
Fidelity Spartan Extended Market Index Fund
The Extended Market Index Fund looks to invest broadly in the domestic stock market but excludes those companies in the S&P 500. Considering that the S&P 500 generally consists of the largest companies in existence, this fund is primarily focused on small- and mid-cap stocks.
This fund also charges an annualized expense ratio of 0.07%.
Vanguard Total Bond Market Index Admiral Shares
The Total Bond Market Index Fund targets investment-grade debt issues of all maturities and aims for an allocation of roughly two-thirds of total assets in government bonds and one-third in corporate bonds.
Like the mutual funds listed above, this fund has a 0.07% expense ratio.
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