What is passive fund management?

Updated by Laurène

Passive fund management is an investment strategy, where a fund's portfolio follows and mirrors a market index instead of trying to beat the market.

Passive management is the opposite of an active portfolio management strategy where markets are analyzed, trends are taken into account and investment managers are actively trying to outperform the market. Passive fund management is less work intensive and thus cheaper.

Research has proven that market indexes have outperformed the majority of any actively managed fund. This is why a passive investment strategy at low costs is often the best portfolio strategy for long-term investors.

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