Definition
Active management involves portfolio managers making specific investment decisions to outperform a benchmark index. Managers use research, analysis, and judgment to select securities. Active funds charge higher fees than passive alternatives. Studies show most active managers underperform their benchmarks over long periods after fees.
Example
An active large-cap fund manager analyzes 500 stocks, selecting 50 believed to be undervalued, aiming to beat the S&P 500.
FAQ
What is Active Management?
Investment approach where managers select securities to beat a benchmark.
Why is Active Management important?
Active Management helps investors evaluate fund types and make more informed decisions.