Distinguish between active and passive investment.
The major differences between active and passive investment are as follows &mius;
Active Investment
It is an investment invested after doing independent analysis on value of each investment.
The main objective is to beat market performance.
It focuses on absolute terms.
In view of investor perception, market may be inefficient
It has higher transaction frequency.
It has high returns and more risk.
It has high operating cost.
It includes short term price fluctuations.
High skills are required to make decisions.
It is highly flexible in investing.
Passive Investment
It is invested after investor portfolio is matched with market portfolio.
The main objective is to match tracked index.
It focuses on relative returns.
In the view of investor perception, market may be efficient.
It has low transaction frequency.
It has low returns and less risk.
It includes low operating cost.
It has long term investment focus.
Few skills are required to make decisions.
It has less flexibility.
Published on 27-Jul-2020 11:45:14
