There are two types of people in this world: those who prefer active management and those who favour passive management. Well, those might become big claims, but the divide has been a longstanding debate in the financial industry. With market uncertainty unlike anything we’ve ever seen before, investors and financial professionals must consider all strategies in order to best meet their investment objectives.
The active management of investments has recently gained popularity, particularly during notable upswings in market events. The attraction began when investors unsurprisingly wanted to cash in on short-term price fluctuations. It requires meticulous oversight (typically by a portfolio management team) going far beyond the surface analysis of markets and delving further into quantitative and qualitative data that us mere mortals may not have access to. This provides professionals with educated insights as to when market events may occur.
The passive management of investments requires long term decision-making as buying and selling positions occurs less frequently. Investors in this category typically opt for index or mutual funds which creates some form of consistency in performance. Passive investments have garnered more asset flows in recent years.
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