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 ?
The fund seeks to capture the growth available in emerging markets through a high-conviction actively-managed portfolio, which uses Newton's investment themes to guide its long-term approach, together with strong fundamental stock-picking skills to not only find the best companies in which to invest, but also to identify those sectors and industries that are best avoided.
From a 'basket' of Shari'ah-compliant companies, a selection is made of those whose earnings are most likely to exceed the market average and the result is an actively-managed portfolio intended to outperform an Islamic equity index.
An open-ended gilt fund, DWS Gilt Fund offers investors the opportunity to invest in an actively-managed portfolio of government securities.
E*TRADE also announced that it has begun a subscription offering for the newest, actively-managed portfolio in Bridgeway's family of domestic equity funds, the Bridgeway Micro-Cap Limited Portfolio.
The fund combines an actively-managed portfolio of large-cap stocks with the writing of covered calls.
Building diverse, actively-managed portfolios is the foundation of our investment strategy," said Burt Snover, President of Fund Architects.
Ben's strong experience in portfolio construction, strategy and risk management will strengthen our fixed income team and allow us to continue providing diversified, actively-managed portfolios for our clients," said Wiley Angell, executive managing director of FAMCO.
It includes five distinct, actively-managed portfolios intended for individuals and institutions seeking professional portfolio management.
According to de Vassal his paper entitled "Seven Risks of Market Indexing," demonstrates that while there are inherent attractions to market indices, including lower fees and transaction costs versus most actively-managed portfolios, investors often assume higher levels of risk than they might realize.