Passive v active investment management

Passive investing is most often viewed as an index tracking investment strategy and in its simplest form, a passive index tracking fund attempts to match the performance of a particular ‘index' of shares. This means that the fund will attempt to grow as closely as possible to the growth rate of that particular index. Index tracking is known as passive because the manager is not normally making significant decisions about which companies to buy and sell and is instead simply following the index. There are two main methods of index tracking in order to achieve a similar growth rate to the und...