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Active Portfolio Management Advantages And Disadvantages

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To make the future secure for the individuals investing wisely is very essential.
The collection of investment tools such as stocks, shares, bonds, mutual funds, cash etc., which depends on the income, budget, and time frame which is more convenient for the investors, is called a portfolio. The portfolio management is nothing but an art of selecting the investment policy which is right for the individuals in terms of maximum returns and minimum risk. Under the guidance of the portfolio managers who are experts to manage money of individual refers to a portfolio management. The active portfolio management and passive portfolio management are two main investment strategies that can generate a very good returns based on the investment accounts. Based on the utilization of the investments the approaches will be differ which are in the portfolio over time will be depends on the account managers. Compared to a specific benchmark Active portfolio management focuses on outperforming the market, while the aim of the passive portfolio management is to mimic the investment holdings of a particular index.

1.2 Advantages and Disadvantages:

Active Portfolio Management

Advantages The benefits of active manager are depends on his ability how to outperform the market or attribute it or to choose mutual fund managers that can outperform the …show more content…

In the active management strategy portfolio manager exploits the inefficiencies of market by short selling overvalued securities or by buying undervalued securities. The combination of these procedures can be used or alone can be used. Depending on the targets of the mutual fund or specific hedge fund or investment portfolio the Active portfolio managers creates less risk compared to benchmark index. Creating an investment return larger than the benchmark is considered as goal of risk

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