8

Active or passive?

Once you have a good idea of your overall wealth plan and asset allocation policy you will need to make a third key decision: should you pursue an active or passive investment approach or a combination of the two? Figure 8.1 sets out the key characteristics of each approach.

Figure 8.1 The three investment management approaches

Figure 8.1 The three investment management approaches

Source: Vanguard

Active investment management

Active investment management is where a manager (or investor) aims to beat, rather than simply match, the return of an investment market or agreed benchmark. Active investment management can be at the asset allocation or stock selection level or a ...

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