Passive and active investment management are two different approaches to managing investments.

Passive investment management, also known as passive investing, is an investment strategy that seeks to match the performance of a market index, such as the S&P 500, by buying all or a representative sample of the securities in that index. Passive investors generally do not try to time the market or select individual stocks. Instead, they rely on the market to generate returns. The main benefits of passive investing are low management fees, and the ability to match the market return.

Active investment management, on the other hand, is an investment strategy that seeks to beat the market by selecting individual securities or actively managing the portfolio. Active investors rely on research, analysis, and market timing to make investment decisions. They attempt to outperform the market by picking winning stocks, timing the market, or using other strategies to generate higher returns. The main drawback of active management is the higher management fees, and the fact that most active managers fail to beat the market.

In summary, passive investment management is based on the idea that markets are efficient and that it's hard to beat the market, while active management is based on the idea that markets are inefficient and that it's possible to beat the market.

Which approach is ‘better’ is open for debate and I suspect will never be fully resolved. That said, you should speak to a financial adviser about what might suit you.

Rick Maggi