Active Management

Active management is a philosophy of investing that contrasts with passive management. It advocates the idea that if an investor chooses investments according to his specific criteria, he can meet his investment objectives better than investing in an index fund(which does not actively choose investments, rather it benchmarks its returns to a predetermined index.)

The debate between active management and passive management has been fierce. There is no final conclusion which type is better, therefore the investor must take his personal circumstances into account before deciding on which path to take. Say Joe is an experienced engineer with 30 years experience in the mining industry. With his deep knowledge of the industry, coupled with investment acumen, he could probably do better actively managing his investments than if he relied on investing in an index fund.

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