Active management is the use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund’s portfolio. Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold and sell. The opposite of active management is passive management, better known as “indexing.” — Investopedia
Few Actively Managed Funds Consistently Beat the Market
Actively managed funds seek to add value through conventional securities selection methods, and typically charge higher fees than index or factor funds. This is one reason why so few beat their index over the long run, net (i.e. after) fees.
Sustainability-oriented active strategies select or exclude companies – usually large cap – based on fundamental analysis of the businesses, including their carbon-intensity and sustainability practices. Some academic research suggests that, on average, sustainability leaders are better managed than sustainability laggards in comparable industries and, therefore, are more likely to outperform. If so, the odds of such funds beating their index may be higher than the average actively managed fund.
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