Passive Investing

The rise of passive investing has led to a major shift in investment flows in recent years. Active investment is an umbrella investment style in which portfolio managers engage and take active investment decisions on the basis of research or other metrics in an effort to beat their benchmarks. Passive investment, by contrast, is investment aiming to track an index funds or ETFs. That means they need to replicate the performance of the index or ETF, not underperform or over-perform. Passive fund management is a much cheaper way to invest. Passive funds offer the possibility to gain exposure to a specific market segment.