Active and Passive Investment Strategies

Active investment strategies involve actively selecting and managing individual stocks, bonds, or other assets with the goal of outperforming the market. Investors or fund managers research and make frequent trades based on market trends and analysis. Passive investment strategies, on the other hand, aim to replicate the performance of a specific market index (like the S&P 500) by holding the same assets in the same proportions. This approach requires less frequent trading and typically incurs lower costs. Essentially, active strategies seek to beat the market through skillful management, while passive strategies focus on matching the market's overall performance.