The Role of Active Management in a Modern Portfolio
In short a passive fund seeks to replicate the relevant market index, rather than select individual stocks, so that the performance of the fund will be in line with that index, less any management or transaction costs, which are generally mall. It could be one of the main stock market indices, such as the S&P 500 for US or the FTSE 100 for UK companies, or one representing a smaller subset of the investment universe based on a particular sector or investment style.
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