What Does Active Management Mean?
The use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund's portfolio. Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold and sell. The opposite of active management is called passive management, better known as "indexing".

Investors who believe in active management do not follow the efficient market hypothesis. They believe it is possible to profit from the stock market through any number of strategies that aim to identify mispriced securities.

Investment companies and fund sponsors believe it's possible to outperform the market, and employ professional investment managers to manage one or more of the company's mutual funds. The objective with active management is to produce better returns than those of passively managed index funds. For example, a large cap stock fund manager would look to beat the performance of the Standard & Poor's 500 Index. Unfortunately, for a large majority of active managers, this has been difficult. This phenomenon is simply a reflection of how hard it is, no matter how smart the manager, to beat the market.


Investopedia.com

2 comments:

bhavin shah said...

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thanks for sharing such a useful information
nice blog.. keep d info runnin

Steinar Arason said...

Helpful information and I will use it and link back to you if you don't mind.

And I followed you too. See you around

Steinar Arason
www.traffic-payout.blogspot.com

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