CHAPTER 5: Active Investment Vs. Passive Investment
Before we jump to the advantages, disadvantages and limitations of Active and Passive investing, let us first understand what it actually means. The core idea of Active-Passive is, it identifies the style of investment strategy. These are two broad categories, that reflects investment style one can follow to build a portfolio. Funds or schemes based on Active Investment strategy are called as Active (actively managed) Funds whereas, Funds or schemes based on Passive Investment strategy are called as Passive funds. Passive Investment As name suggest, passive investment strategy is a method in which investor deploys money in predefined idea. Investor does not have to micromanage the allocation on daily basis. The investment then mirrors the performance that is given by that particular predefined idea. There are over 1000 listed companies in stock market. It is difficult to track price movement of each and every stock on daily basis. So, the ‘Index , an indicator that refle