Active Management

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Active Management

The opposite of passive management. The passive manager simply minimizes the tracking error of their portfolio and a well known index (e.g. S&P 500 index mutual funds). The active manager will deviate from the benchmark weights by (i) varying the weights from the benchmark weights on the securities; (ii) adding securities outside the benchmark or choosing not to hold securities included in the benchmark and (iii) time-varying asset allocation where weights on certain asset classes change through time. The goal of active management is to produce a return that exceeds the passive return with minimal risk.

Active Management

The practice of a money manager or a team of money managers making investment decisions on what securities to include in a mutual fund or portfolio. Sometimes active management exists within certain parameters; for example, money managers may only buy blue-chip stocks for a certain fund and growth stocks for another. The basic premise of active management, however, states that the managers can maximize the return for investors by buying or selling securities on a fairly regular basis. See also: Passive management, Indexing.
References in periodicals archive ?
On Thursday September 26, Nordea listed the first actively-managed ETFs on NASDAQ OMX Stockholm and NASDAQ OMX Helsinki.
In the late 1990s, trackers were performing well, but in the wake of falling shares and increased turbulence in global stock markets, actively-managed funds seem to have taken the lead.
Most independent financial advisors now recommend that shareholders, even those under the umbrella of unit or investment trusts, should look towards building a diversified portfolio with a foot in both tracker and actively-managed funds.
This is the latest shot in the battle between actively-managed funds, where managers pick shares, and so-called trackers, which follow the stock market.
Funds that don't track an index, or actively-managed funds, average about 1 percent a year in expenses that customers pay, said Russell Kinnel, head of equity fund research at Morningstar, a mutual fund rating agency in Chicago.
Financial Services Veteran to Lead Actively-Managed ETF Effort
July 28, 2014 /PRNewswire/ -- Precidian Investments, is pleased to announce that Capital Research and Management Company, one of the largest mutual fund sponsors in the United States, has licensed the firm's patented intellectual property for actively-managed, periodically-disclosed exchange traded funds (ETFs).
BT Financial Group has received approval for its MySuper licences, paving the way for the launch of new actively-managed funds from the Australian Prudential Regulation Authority (APRA).
CHICAGO -- Foley & Lardner LLP announced today that it served as lead regulatory counsel to Bear Stearns Active ETF Trust in bringing the first actively-managed exchanged-traded fund (ETF) to market.
31, 2012 /PRNewswire/ -- AdvisorShares, a leading sponsor of 17 actively managed exchange-traded funds (ETFs), announced today that the AdvisorShares Peritus High Yield ETF (NYSE Arca: HYLD), the first high yield actively-managed ETF has met listing requirements of the Chicago Board Options Exchange (CBOE) and that HYLD options are now listed for trading on the CBOE.
Using listed securities, actively-managed mutual funds, index funds, ETFs and other securities, investors can purchase entire portfolios in a single transaction, with no minimum, investing by dollar amount or number of shares.
To promote investing in passive index funds, many financial advisors quote statistics on how most actively-managed mutual funds underperform their benchmark index.