There are a lot of choices when investing, but when it comes to funds there are two main approaches, active and passive.
Active funds are overseen by portfolio managers who choose to invest in a selection of stocks or bonds with the aim of outperforming a comparable stock market index. These funds are generally subject to higher fees, but have the potential to deliver returns in excess of the benchmark through the skill of professional portfolio managers.
Index (or passive) funds are also overseen by portfolio managers and aim to replicate the performance of an index, such as the S&P 500 in the US. There isn’t the same “active” stock picking by the portfolio manager. These funds typically achieve diversification and returns in-line with stock market averages, but management fees are low.
There are two commonly used index investing fund types: traditional index tracker funds and exchange traded funds (ETFs). At BlackRock we offer over 200 index funds across index tracker funds and ETFs.
Remember that all investments involve an element of risk and past performance is not a guide to future performance. The value of your investment and the income from it will vary, and your initial investment amount cannot be guaranteed.