Active management
An investment strategy that does not invest according to a market-value-weighted index. This strategy often requires regular buying and selling transactions.
The objective of active management is to achieve an improved outperformance net of costs relative to the market.
Factor investing and active investing are closely related. If you choose to use one or more factors, you are choosing to invest actively relative to a broad market-weighted index.
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Passive management means that investments are made in all market segments. In contrast to factors with a positive premium, there are also factors with a negative premium, such as high-volatility equities. The idea of factor investing is to actively avoid these segments.
