Active Investing

Category: finance

A strategy of buying and selling individual stocks to outperform the market index.

Active investing is "hands-on." You monitor the news, read the balance sheets, and rotate your portfolio to find the "winners." It is high-effort, high-potential-return, and high-tax-risk compared to passive index strategies.

Common Examples

• Active investing is necessary for our hedge fund mandate, as we aim to capture alpha beyond the broad market benchmark.
• The success of active investing depends entirely on the manager’s ability to correctly predict mispriced securities in the market.