--%>
Assignment Help - homework help

Active versus Passive fund managers

Active vs. Passive fund managers:

Passive fund managers adopt a long term buy and hold strategy. Usually, stocks are purchased so that the portfolio’s returns will track those of an index over a period of time. Because of this goal of keeping a track on the index, this approach is also called indexing. The purpose of an indexed portfolio is not to beat the target index but to match its performance.

Active fund manager on the other hand attempts to outperform a passive benchmark portfolio on a risk adjusted basis. A benchmark portfolio is a passive portfolio whose average characteristics including factors like beta, dividend yield, industry weighting and firm size match the risk return objectives of the client. When deciding to whether to follow an active of a passive investment strategy, the investor must assess the trade-off between the low cost but less exciting alternative of indexing versus the higher cost but potentially more lucrative alternative of active management.

   Related Questions in Corporate Finance

  • Q : How can optimal capital structure be

    How can optimal capital structure be calculated?

    		•
  • Q : Which data is the most suitable for

    Which data is the most suitable for finding betas?

    		•
  • Q : When the dividend shows real money The

    The dividend is the part of the net income which the company distributes to shareholders. When the dividend shows real money, the net income is also real money. Is it true?

    		•
  • Q : FIN3000 Corporate Finance Task

    Task Description Length: 1000-2000 words (up to 500 words above 2000 permitted) Description: • Complete this assignment in groups of 4-5 students. • Maintain a portfolio of financial issues taken from 8 news sources. • Analyse the articles with reference to theory covered in class and h

    		•
  • Q : Which parameter good measures value

    Which parameter good measures value creation; the Economic Value Added (EVA), the CVA (Cash Value Added) or the economic profit?

    		•
  • Q : What are flow variables Flow variables

    Flow variables: Any variable, whose magnitude is evaluated over a time period, is termed as glow variable.

    		•
  • Q : Difference between capitalization and

    Is the difference for the value creation in a company among the market value of the shares (capitalization) and their book value a good measure since its foundation?

    		•
  • Q : Affect the value of the stock Is the

     Is the value of this stock dependent on how long you plan to hold it? In other words, if your planned holding period were 2 years or 5 years rather than 3 years, would this affect the value of the stock today, P0? Explain your answer.<

    		•
  • Q : Finc . A&B Enterprises is trying to

    . A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow: Year A B C D 1 $10,000 $50,000 $25,000 $ 0 2 20,000 40,000 25,000 0 3 30,000 30,000 25,000 45,0

    		•
  • Q : Using the DCF method Your Corp, Inc.'s

    Your Corp, Inc.'s data is as follows:Beta; 1.30Recent dividend; $.90Expected dividend growth; 7%Expected return of the market; 14%Treasury Bills are yielding; 4%Most recent stock price; $65 A] Us

    		•