Passive Management Definition

Jan 16, 2024

Reviewed by: etf.com Staff

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.

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ETF Glossary

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.

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