Active & Passive Flashcards
1
Q
What is active management?
A
Human factor
Manager aims to outperform market
Can minimise losses by avoiding certain sectors
Many managers use a mix of active and passive funds
2
Q
What has higher fees active or passive
A
Active
3
Q
What are the main approaches of an active fund manager
A
Top down - asset allocation considered first before sector and stock selection
Bottom up - individual stocks selected on their own merit ie stock picking
4
Q
What does the term core satellite refer to?
A
Used for a investment portfolio that is actively managed however it mainly follows an index (its core) but often has specialist funds around it (satelite)
5
Q
What is passive management?
A
Indexation - aims to replicate an index with no attempt to outperform it.
