Active Management

What Is Active Management?

How Active Management Works

Because of this, the results of an active strategy tend to depend heavily on the skill and judgment of the manager, and on their ability to anticipate market moves. Active managers often monitor market trends closely in an attempt to improve their chances of making well-timed trades. Outcomes are never guaranteed, and even experienced managers can underperform.

Active vs. Passive Management

Active management usually involves more frequent trading, higher costs, and greater risk, so it tends to carry higher management fees than passive strategies. Historically, over long time horizons, a large majority of active funds have not beaten their benchmark indexes after fees. This is one reason interest in low-cost passive strategies has grown in recent years, though active management may still appeal to those seeking exposure to specific opportunities or niche markets.