Difference Between Active & Passive Investing

Published : 17 Mar 2023

Active Investing: Active investing refers to taking a more proactive approach to the management of an investment portfolio. The goal is to outperform – or “beat” – the market

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Passive Investing: Passive investing is often utilized by investors with a long-term horizon. The core tenets are that – over a multi-decade time interval – the market will be higher and will outperform the active investing strategy

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Active Investing: More concentrated portfolio with fewer securities than broad market index

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Passive Investing: All securities of market index held to match market performance

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Active Investing: This involves a high turnover that is, it has more buying and selling activities

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Passive Investing: This involves comparatively lower turnover as the changes occur usually when theres a change in the index composition

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Active Investing: Offers higher returns but involves higher risk

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Passive Investing: Offers lower risk but Involves a lower risk

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Active Investing: Takes advantage of short-term price fluctuations

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Passive Investing: Ignores short term fluctuations and focuses on long term investment goal

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