From Fidelity.com….
Mutual funds and ETFs come in a variety of flavors. Many investors have developed a taste for index mutual funds and ETFs, which have become a staple of many portfolios.
Part of the appeal of so-called passive investments is their low cost compared to most actively managed mutual funds and ETFs. With active funds and ETFs, a manager attempts to deliver performance that outpaces a chosen index, often referred to as a benchmark. Passive ETFs and mutual funds, on the other hand, try to match the performance of a benchmark. Benchmarks may include familiar indexes such as the S&P 500, as well as custom benchmarks created by a fund’s managers. Passive investments may not offer the potential to outperform an index, but they typically offer lower costs than active funds managed against a similar index or benchmark. Since 2019, Fidelity has offered investors 4 index mutual funds that have zero expense ratios and no required minimum investment amount.
