Active vs. Passive Investing


Due to market dynamics, we believe taking an active role in managing our clients’ portfolios is most effective in driving optimal returns and delivering Alpha.  Below you will find the main attributes to both styles:

Active investing is generally a more dynamic approach to investing. Key attributes of Active investing are:

  • Portfolios are re-balanced (adjusted to maintain optimal weightings) as often as necessary.
  • Asset allocation between Stocks, Bonds, and Cash weightings will shift depending on the strategic market outlook.
  • Buying or selling of stocks and bonds occurs as opportunities arise.
  • Defensive portfolio allocations can increase when markets conditions warrant.

Passive investing involves a static policy reflected in infrequent changes to the portfolio asset allocations and holdings. Key attributes of Passive Investing are:

  • Implicitly assumes that the market continually goes up over the long term – which history has shown is not necessarily true.
  • Portfolios are set based on a “long-term” optimal mix and are not proactively adjusted to reflect impending market risks.
  • Asset allocation between Stocks, Bonds, and Cash stay in their proportional weightings for long periods of time.
  • Passive investing is often championed by much of the financial services industry.