Active Management Law and Legal Definition

Active management is the use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund's portfolio. To make investment decisions, active managers rely on analytical research, forecasts, and their own judgment and experience. Passive management is the opposite of active management and is better known as "indexing." Active managers think that they can profit from the stock market through any number of strategies that aim to identify mispriced securities. The objective of active management is to produce better returns in case of index funds.