ACTIVE OR PASSIVE?
‘I don’t try to be clever at all. The idea that I could see what no one else can is an illusion.’1
Daniel H. Kahneman, Nobel Laureate 2002
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 a passive investment approach or a combination of the two? Figure 10.1 sets out the key characteristics of each approach.
Figure 10.1 The three investment management approaches
Source: The Vanguard Group.
Active investment management
Active investment management is where a manager (or investor) aims to beat, rather ...