If you have opted to obtain advice from experts in investments, you may come across different types of portfolio management services that are available to consumers. Portfolio management concerns the decision-making of how a person’s money is invested using strategies that seek to balance potential risk and performance. In this blog, we’ll explain the difference between passive and active portfolio management.
Passive management
A passive management strategy does not attempt to best the financial market. This strategy is adopted by those who feel that fundamentals can be found in an underlying asset’s value. It is typically used by those who wish to minimise the risk involved in investing. One of the easiest ways to use a passive investment strategy is to invest in a dedicated index fund that tracks a market index. A low-cost option, these strategies are often attributed to strong long-term gains.
Active management
This option for portfolio management requires high-level experience of financial markets. Expert portfolio managers implement active strategies with the aim of earning greater returns than the present financial market. It is described as ‘active’ because it needs constant evaluation of the current market to obtain assets when they are undervalued and then sell them swiftly when they are outperforming the norm.
The most significant benefit of an active strategy is its potential for earning substantial returns and always having an expert eye on how your portfolio is performing. If you need portfolio management in Shropshire, contact out expert team at Hartey Wealth Management today.
