What is Active Management?
When it comes to managing an investment portfolio, active management refers to a proactive and focused approach to making investment decisions. The goal of active management is to not only achieve the average rate of return on investments, but to exceed those rates. In order to accomplish this goal, people who choose to engage in active management tend to be directly involved in the growth of the portfolio, rather than taking a passive role in the process. The basis of employing an active management strategy usually involves assembling a portfolio of investments that is a little different from the most common and popular market stocks, bonds, and equities. The active manager will be on the lookout for opportunities that indicate potential for growth beyond the benchmark index, and take steps to secure the investment while it is still relatively unnoticed by a broad range of investors. Active management is a process that involves a great deal of effort on the part of the investor. Marke
Active management might best be described as an attempt to apply human intelligence to find “good deals” in the financial markets. Active management is the predominant model for investment strategy today. Active managers try to pick attractive stocks, bonds, mutual funds, time when to move into or out of markets or market sectors, and place leveraged bets on the future direction of securities and markets with options, futures, and other derivatives. Their objective is to make a profit, and, often without intention, to do better than they would have done if they simply accepted average market returns. In pursuing their objectives, active managers search out information they believe to be valuable, and often develop complex or proprietary selection and trading systems. Active management encompasses hundreds of methods, and includes fundamental analysis, technical analysis, and macroeconomic analysis, all having in common an attempt to determine profitable future investment trends. WHAT I
