Passive Management Definition

Learn the definition of passive management and other ETF terminology from the etf.com glossary.

ETF
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Passive Management

Passive Management in ETFs signifies an investment approach focused on mirroring a specific index's performance. By eschewing active stock selection, these ETFs offer investors a cost-effective and transparent strategy, minimizing the need for continuous managerial intervention. Embracing a ""buy and hold"" philosophy, passive ETFs aim to replicate the index's returns, rather than beating it, attracting investors seeking a straightforward and low-cost avenue for diversified market exposure. This approach not only aligns with a long-term investment horizon but also positions investors to benefit from broad market trends while minimizing the potential drawbacks associated with active management.

Related Terms

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.