Active Management refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming a benchmark index. Ideally, the manager exploits market inefficiencies by purchasing securities that are undervalued (and/or, less frequently, short selling securities that are overvalued. Depending on the goals of the specific investment portfolio or mutual fund, active management may also strive to achieve a goal of less volatility or risk than the benchmark index instead of, or in addition to, greater long-term return.
Active management is the opposite of passive management, where the manager does not seek to outperform the benchmark index.
- design on March 18, 2017 @ 08:03:38
This post was created by Björn Becker on March 18, 2017.