What is active investing?

Active investing refers to an investment strategy where the investor makes frequent trades with the goal of outperforming the market. This approach typically involves analyzing market trends, studying individual securities, and responding to changes in the economic landscape. Active investors actively seek to take advantage of short-term market fluctuations and identify opportunities that may lead to higher returns than a passive investment strategy, which often mirrors market indices.

In contrast, a hands-off approach to managing investments, focusing primarily on low-risk investments, or types of investments that require no ongoing management represent different investment strategies that do not involve the frequent trading and proactive decision-making characteristic of active investing. These strategies prioritize stability and minimal intervention rather than the dynamic and engaged methodology that defines active investing.