Investment FAQ – What is a Passive Investment Strategy as opposed to an Active Strategy?

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Investment FAQ – What is a Passive Investment Strategy as opposed to an Active Strategy?

 

Simply put, a passive strategy is one which aims to achieve the average investment returns of its particular asset class. An example of a passive equity strategy would be an investment that aimed to mirror the ASX200 Australian share-market index.

Passive strategies tend to be lower cost and aim to allow the investor to benefit from the inherent returns of that particular asset class over time.

In being passive, there is little or no trading done and hence returns are not tarnished by transaction fees incurred.

An active strategy is one in which the investor aims to use skill and nous to beat a particular asset class index. By actively managing a portfolio over time, the investor aims to achieve returns above those achieved by the index.

 

Investment Portfolio Types: What are they? from Prime Financial Group on Vimeo.

 

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Disclaimer:
This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.

 

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By | 2017-06-16T15:16:14+11:00 December 7th, 2016|Investment Advice, Uncategorized|0 Comments

About the Author:

Prime is an Integrated Wealth Management Firm for business owners and family groups. Prime’s goal is to become the Premier Partner to Accountants for Growth, Succession and Integrated Wealth Management and to deliver personalised advice to clients for a secure financial future.