Which type of mutual funds tend to have the lowest management fees?
A.
Asset allocation
B.
Small cap
C.
Bond
D.
Index
The Answer Is:
D
This question includes an explanation.
Explanation:
Index mutual funds are structured to replicate the performance of a market index, such as the S & P/TSX Composite Index. Since these funds do not require active management, their management fees are among the lowest compared to other types of mutual funds. Active management in asset allocation, small-cap, or bond funds involves more frequent trading and research, increasing operational costs.
[References:, CSC Volume 2, Chapter 18: "Mutual Funds: Types and Features," discusses indexing as a fund management style and highlights its low costs compared to actively managed funds., ]
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