Passive Management
A style of management associated with mutual and exchange-traded funds where a fund's portfolio mirrors a market index. Passive management is the opposite of active management in which a fund's manager(s) attempt to beat the market with various investing strategies and buying/selling decisions of a portfolio's securities.
Also known as "passive strategy," "passive investing" or "index investing." Investopedia Says:
Followers of passive management believe in the efficient market hypothesis. It states that at all times markets incorporate and reflect all information, rendering individual stock picking futile. As a result, the best investing strategy is to invest in index funds, which, historically, have outperformed the majority of actively managed funds. Related Terms:
Active Management
Buy And Hold
Dedicated Portfolio
Efficient Market Hypothesis - EMH
Expense Ratio
Inactivity Fee
Index
Index Fund |