What Causes Swelling On Outer Side Of Knee Joint?

Hello Doctor, my daughter is 5 years old, she has a swelling on the outer side of her right knee joint, it is a soft lump but the is no pain. I noticed it when she was 2 years old. The Doctor did an Xray and Scan, but he did not know what it is, and he wanted to cut it out. I did not take her back for the surgery because no tests were done and I am not sure whether it is a good idea to operate on her. What should I do? Regards Mzoli South Africa.