Question

MULTIPLE CHOICE Question 1

All of the following have been major, recent trends in mutual fund investing EXCEPT:

Growth in assets in exchange traded funds

Decline in fees and expenses

Growth in no-load funds

Decline in passively managed funds

Growth in target-date funds

Question 2

There are many types of mutual funds and exchange traded funds, but as an entire group, their primary and defining benefit relative to other types of investments is which of the following:

Hybridization

Voting rights

Government insurance

Low management costs

Diversification

Question 3

Which of the following is typically NOT one of the major investment objectives used to categorize mutual funds?

Development

Income

Growth

Income and Growth

Capital preservation

Answer 1

All of the following have been major recent trends in mutual funds except - Decline in passively managed fund

Hang around financial markets these days and you're unlikely to go too long before hearing the phrase "passive investing."

And no trend has reshaped the investing world over the last couple of decades quite like the preference to park money in passive rather than active funds. A recent report from Deloitte said that in 2015, 72% of money invested into funds went into those of a passive vintage.

Passive investing - in contrast to active investing - typically describes money that seeks to earn the same return as a given index. These funds are also typically lower-cost, as the investment objective is to merely maintain a composition similar to an already existing index and earn that same return. Active investing, on the other hand, is a fund that makes portfolio changes in an effort to outperform some benchmark

For investment professionals, however, passive investing means lower feesbecause paradoxically, what is good for investors is not good for those who manage investments. A 2015 study from Morningstar said the average expense across all funds in 2014 was 0.64%. And this is down from 0.76% in 2010. And so investing fees are coming down and coming down fast.