Passive management


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Passive management

Passive Management

The practice of a money manager or a team of money managers making investment decisions on what securities to include in a fund or portfolio, and then leaving those securities largely unchanged for a significant period of time. To give a very simple example, an investment manager may buy every stock on the Dow Jones Industrial Average and hold them for a period of five or 10 years. Passive investment managers seek a well diversified set of securities. See also: Indexing, Active investing, Value investing.
References in periodicals archive ?
The launch coincides with a surge in investor demand for strategic beta strategies as investors weigh the pros and cons of active and passive management.
The strategy employs a global approach to asset allocation, and uses a cost-effective blend of active and passive management to achieve its objectives.
Passive management are mostly index-tracker funds which supposedly do exactly that - track the performance of a particular index, eg the FTSE 100, S&P 500, Topix.
Combining quantitative treatment with conceptual discussion, the author presents fourteen chapters on the nature of financial markets, the efficient market theory, return and volatility estimates, diversification benefits and correlation estimates, the Capital Asset Pricing Model and Arbitrage Pricing Theory, the equity fundamental multifactors model, financial derivatives, fixed income and interest rate risk, liquidity risk, active management versus passive management, stress testing and back testing, and the third Basel Accord on banking supervision.
He emphasised that passive management does not mean that you have to hedge a 100 per cent of the transaction value but it's now a strategy to move towards optimal from sub-optimal passive hedge.
We believe buy and hold strategies are a thing of the past and passive management is not at the core of our practice.
In fact the estimate for a net flow of $516 million from passive funds may well be rather conservative, because many passive management funds have already exited the Greek bourse due to its low bearing, so the outflow from the Athens Exchange's demotion from the developed market category will amount to no more than $100 million, the Citigroup report notes writes Kathimerini.
WHEN placing your money into an investment portfolio, there are two main investment strategies available - active or passive management.
Factor 1 was named as Contingent reward, Factor II is known as Passive Management by Exception, and Factor III was named as Active Management by Exception
Active management produces desired results; passive management produces catastrophic events.
As for active versus passive management strategies, investors would do well to gain exposure through active management, Jafree says.
He said that the fund would provide 'exposure and passive management in an efficient way, when active fund management has taken a hit.