Active Risk
A type of risk that a fund or managed portfolio creates as it attempts to beat the returns of the benchmark against which it is compared. In theory, to generate a higher return than the benchmark, the manager is required to take on more risk. This risk is referred to as active risk.

Investopedia Says:
The more an active portfolio manager diverges from a stated benchmark, the higher the chances become that the returns of the fund could diverge from that benchmark as well. Passive managers who look to replicate an index as closely as possible usually provide the lowest levels of active risk, but this also limits the potential for market-beating returns.

Related Terms:
Active Investing
Benchmark
Index
Passive Investing
Risk-Return Tradeoff
Unsystematic Risk

• Default Probability
• Default Risk
• Defeasance
• Defeased Securities
• Defensive Acquisition
• Defensive Buy
• Defensive Company
• Defensive Investment Strategy
• Defensive Stock
• Deferment Period
• Deferred Account
• Deferred Acquisition Costs (DAC)
• Deferred Acquisition Costs (DAC)
• Deferred Annuity
• Deferred Charge
• Deferred Income Tax
• Deferred Interest
• Deferred Interest Bond
• Deferred Long-Term Liability Charges
• Deferred Payment Option
• Deferred Profit Sharing Plan (DPSP)
• Deferred Profit Sharing Plan (DPSP)
• Deferred Revenue
• Deferred Share
• Deferred Tax Asset