Passively managed

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.

Passively managed.

An index mutual fund or exchange traded fund is described as passively managed because the securities in its portfolio change only when the make-up of the index it tracks is changed.

For example, a mutual fund that tracks the Standard & Poor's 500 Index buys and sells only when the S&P index committee announces which companies have been added to and dropped from the index.

In contrast, when mutual funds are actively managed, their managers select investments with an eye to enabling the fund to achieve its investment objective and outperform its benchmark index. Their portfolios tend to change more frequently as a result. They also tend to have higher fees.

The performance of passively managed indexed investments and their risk profiles tend to correspond closely to the asset class or subclass that the index tracks. They tend to be more popular in bull markets when their returns reflect the market strength and less popular in bear markets when active managers may provide stronger returns.

References in periodicals archive ?
Those asset classes may include actively managed investment funds as well as passively managed exchange-traded funds.
operations, including the concentration of data and development work at our offshore facilities in China and India; and trends in the mutual fund industry, including the increasing popularity of passively managed investment vehicles.
Like a unit trust, ETFs provide exposure to a basket of securities but incur lower fees as they are passively managed.
JETS is a smart beta, passively managed fund that is designed to track the US Global Jets Index.
It also employs a passively managed, index sampling strategy to gain exposure to developed and emerging equity markets in Asia (excluding Japan).
Fidelity, who has been managing index funds for over 25 years, now offers 16 Fidelity index mutual funds and 12 passively managed Fidelity ETFs totaling
Amid the buzz that surrounds them as VC darlings and Davids to Wall Street's Goliath, do robo firms that deliver lower-fee, Web-based investment management services on a largely automated, passively managed platform present an immediate and genuine threat to the traditional face-to-face, brick-and-mortar model?
Over that period, passively managed funds had inflows of $132 billion, an average of $19 billion per year.
Celebrity investor Warren Buffett is leading the charge into passively managed indexed funds.
Saudi's inclusion in the MSCI emerging market index will result in large flows of passively managed money into the Saudi market.
On the other hand, most ETFs are passively managed as they typically invest in the same securities that comprise an index they track, such as the Sensex.
Passively managed market-neutral funds don't seem like sure things, either.