Which of the following is TRUE of mutual funds?
I. Active funds generally give higher returns than passive funds.
II. Most mutual funds generally give higher returns than broad stock indexes.
A) I only
B) II only
C) both I and II
D) neither I nor II

Question

Quizplus · Accepted Answer

Neither of the statements is true. Active funds do not always give higher returns than passive funds as active fund managers may underperform their benchmark indexes and incur higher fees. Additionally, most mutual funds do not give higher returns than broad stock indexes as studies have shown that index funds tend to outperform actively managed funds in the long run due to lower fees and broader diversification.

Which of the Following Is TRUE of Mutual Funds