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Passive Management

Discussion in 'Investing Glossary' started by Glossary, 24th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006

    An investment management style which merely seeks to match a specific index or benchmark. This is usually attempted by buying investment assets which as closely as possible match the weightings of the particular index.

    The amount by which a passive manager underperforms the relevant index is called the "tracking error".

    This investment style is often referred to as index tracking or just "indexing".

    Vangard is a well known index fund manager in Australia and the USA.

    One major advantage of most index funds is that they have very low fees or Management Expense Ratios (MERs) due to the fact that they don't need to employ analysts.

    See also:
    Last edited by a moderator: 25th Sep, 2006