Active and passive investing describe two different approaches to managing investments.
Understanding the difference helps clarify how investment strategies vary.
Active investing
Active investing involves:
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selecting investments with the aim of outperforming the market
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higher involvement by fund managers
Passive investing
Passive investing typically:
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tracks a market index
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aims to match market performance
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often involves lower costs
A final note
This article explains the difference between active and passive investing, not which approach is better.
If investment approach feels unclear, some people find it useful to think things through before advice or action. Evoa exists for that purpose — before advice and before action.