Answer to Question #320866 in Finance for Andrick Angel

Question

What the difference between the active portfolio and passive portfolio? 4marks

Answer 1

Active portfolio management focuses on outperforming the market in comparison to a specific benchmark while passive portfolio management mimics the investment holdings of a particular index in order to achieve similar results.

An active portfolio strategy is an investment strategy that tries to generate maximum value to a portfolio while passive portfolio strategy focuses on maximizing diversification with little expectational input.