Passive investing

How it is used

Often compared with active management, where managers try to beat the index. Supporters point to lower costs and the difficulty of beating the market after fees. Reports talk about the growth of passive investing and money flowing from active to passive funds.

Example sentences

1. Passive investing now accounts for more than half of US fund assets.

2. Low fees are the main reason many savers choose passive investing.

Common collocations

• passive investing strategy
• active versus passive
• passive fund
• rise of passive investing

Related terms

• index fundA fund that aims to match the performance of a market index by holding the same securities in the same proportions, instead of trying to beat it.
• ETFShort for exchange-traded fund: a fund that holds a basket of assets, often following an index, and whose units are bought and sold on a stock exchange like shares.
• expense ratioThe yearly cost of running a fund, shown as a percentage of the money invested in it. It is taken from the fund's assets, so it reduces investors' returns.
• benchmarkA standard, usually a market index, against which the performance of a fund, portfolio or investment manager is measured.
• dollar-cost averagingInvesting the same amount of money at regular intervals, whatever the price, so that you buy more units when prices are low and fewer when they are high.

More terms: Funds & ETFs

• mutual fund
• net asset value
• hedge fund